German Exports Drop 10.6% as Recession Hurts Orders

By Gabi Thesing and Simone Meier

Jan. 8 (Bloomberg) -- Exports from Germany dropped by a record in November as the global recession curbed demand for goods made in Europe’s largest economy.

Sales abroad, adjusted for working days and seasonal changes, slid 10.6 percent from October, when they declined 0.6 percent, the Federal Statistics Office in Wiesbaden said today. That’s the biggest drop since records for a reunified Germany began in 1990. Economists expected a decline of 3.1 percent, the median of 3 forecasts in a Bloomberg News survey showed.

With the global financial crisis eroding demand, German companies are paring output as they grapple with a slowdown in the economies of their main trading partners. Volkswagen AG, Europe’s biggest carmaker, has seen its U.S. sales plunge, while the largest European engineering company, Siemens AG, is finding it “more ambitious” to meet its profit target for this year.

“It’s a very significant drop,” said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. “Unfortunately, there are no indications for us to expect an improvement anytime soon. The exports engine supporting the economy is sputtering.”

The economy contracted 0.5 percent in the three months through September. The Bundesbank said last month it is likely to shrink for a third successive quarter in the final three months of 2008 and will start 2009 from an “already depressed level.” The bank expects the economy not “to pick up again until the projected global economic upturn in 2010.”

Deepening Recession

Adding to signs of a deepening recession, German business confidence dropped to the lowest in more than a quarter-century in December and manufacturing contracted for a fifth straight month. Factory orders, which are published later today, are expected to have declined 1.9 percent in November, the 11th drop in a year.

From the year-earlier month, November exports dropped 12 percent, today’s report showed. Imports fell 5.6 percent in the month and 0.9 percent from a year earlier. The trade surplus narrowed to 9.7 billion euros ($13 billion) from 16.4 billion euros in October. The surplus in the current account, the measure of all trade including services, was 8.6 billion euros.

Volkswagen said on Jan. 5 that U.S. sales fell 14 percent last month from a year earlier, led by drops in the Touareg and Eos models, as the recession discouraged consumers from making large purchases. Its Audi luxury brand posted a 9.3 percent decline in December sales.

German Factories

Lanxess AG, Germany’s largest publicly traded specialty chemicals maker, closed some German factories temporarily and reduced production at others after orders dropped.

German shipments to countries outside the European Union fell 7.8 percent from a year earlier, today’s report showed. Exports to other EU member states fell 14 percent. Imports from within the EU trade bloc dropped 4.7 percent.

The economy of the 16 euro nations, which buy more than 40 percent of Germany’s exports, will probably shrink about 0.5 percent next year after growing 1 percent in 2008, the European Central Bank said last month.

To contact the reporters on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net; Simone Meier in Frankfurt at smeier@bloomberg.net.