German Exports Rose More Than Expected in September

By Simone Meier

Nov. 7 (Bloomberg) -- Exports from Europe's largest economy increased more than economists expected in September as a depreciating euro made German products more competitive.

Sales abroad, adjusted for working days and seasonal changes, rose 0.7 percent from August, when they dropped 0.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a gain of 0.6 percent, according to the median of 12 forecasts in a Bloomberg News survey.

Companies have started to trim spending and output to weather a global slowdown even as the euro's 9.7 percent drop against the dollar over the past two months helps bolster exports. German factory orders fell by a record in September. Still, Bayerische Motoren Werke AG, the world's largest maker of luxury cars, said on Nov. 4 it expects ``positive'' earnings.

``The dramatic drop in foreign orders hasn't yet fully reached exports,'' said Andreas Scheuerle, an economist at Dekabank in Frankfurt. ``The weaker euro isn't able to counter faltering global demand. We're probably already in recession.''

In the year, exports rose 6.9 percent, today's report showed. Imports gained 0.9 percent in the month and 14 percent from a year earlier. The trade surplus widened to 15 billion euros ($19 billion) from 10.6 billion euros in August. The surplus in the current account, the measure of all exports including services, widened to 15 billion euros from 7.5 billion euros.

`Problematic Year'

Central banks around the world are paring borrowing costs as the financial turmoil curbs growth. The European Central Bank lowered borrowing costs for a second time in less than a month yesterday with ECB President Jean-Claude Trichet saying that the financial turmoil ``is likely to dampen global and euro-area demand for a rather protracted period of time.''

The economy of the 15 euro nations, which take just over 40 percent of Germany's exports, will probably expand just 0.1 percent next year after growing 1.2 percent in 2008, the European Commission in Brussels said on Nov. 3. The International Monetary Fund yesterday predicted economic contractions in the U.S., Japan and the euro region in 2009.

In Germany, manufacturing contracted in October and business confidence fell to the lowest level in more than five years. Industrial production probably dropped 1.7 percent in September from the previous month, a Bloomberg survey shows. The Economy Ministry will release the report at noon today.

`Problematic Year'

German Finance Minister Peer Steinbrueck said on Nov. 3 that the European Commission's growth forecast is ``very close'' to the government's 0.2 percent projection for 2009. The German economy is ``facing a very serious, problematic year,'' he said.

HeidelbergerCement AG, Germany's largest cement maker, reported a 41 percent drop in third-quarter profit on Nov. 5 and said it plans further cost cuts to counter a ``considerable deterioration'' of the economy. Chief Executive Officer Bernd Scheifele said that the company had a ``clear break in growth'' in the third quarter.

Still, the price of oil has retreated 58 percent from a July record to around $60 a barrel, while the euro shed 13 percent against the dollar over the past year.

German exports to the euro region rose 5.9 percent in September from a year earlier, today's report showed, and companies sold 8.2 percent more goods to countries outside the European Union. Imports from the euro region rose 15 percent.

Some companies are still confident in the outlook. Munich- based BMW said on Nov. 4 that it's sticking to targets through 2012. The company ``will overcome the current difficult situation,'' Chief Executive Norbert Reithofer said.

To contact the reporter on this story: Simone Meier in Frankfurt at smeier@bloomberg.net