Germany's Trade Shock-----Exports Now Down 10% Y/Y



German imports and exports unexpectedly shrunk in July, with a sharp export contraction causing a surprise narrowing in Germany's trade balance.

Federal Statistical Office data showed seasonally adjusted exports fell by 2.6% - analysts had expected about 0.3% growth - whereas imports fell by 0.7%, as against expectations for a 0.8% rise.
On the year exports slumped by 10% and imports shriveled by 6.5%.
The foreign trade balance shrunk to €19.4 billion ($21.9 billion) from €21.4 billion in June, as against expectations for a balance of €22 billion.
The Federal Statistical Office said the pace of German exports to other EU countries fell by 7% in July, while imports from the region fell by 4.5%. The falls were slightly narrower for trade with other eurozone countries.
German trade outside the 28-nation EU fared worse, with exports plunging by 13.8% and imports by 10.1%.
Faltering German exports amid lackluster worldwide growth and emerging-market volatility has long been a drag on German growth. But the sharper-than-expected export fall challenges expectations of a second-half pickup in German trade with the rest of the world, and the surprise - albeit small -import decline suggests domestic demand isn't robust enough to step into the breach.
The trade data come in a week that the statistics office reported weaker-than-expected industrial output and manufacturing production for July.
But the euro held firm against the dollar after the figures and was recently up 0.11% at $1.1272.
Against the pound it was down 0.04% at £0.8467. A post-Brexit-vote rise in the euro against the U.K. currency has eroded Germany's competitive position with one of its main trading partners.

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