German Exports Fall in January, Deepening Recession

By Gabi Thesing and Jana Randow

March 10 (Bloomberg) -- German exports dropped for a fourth month in January, pushing Europe’s largest economy deeper into a recession.

Sales abroad, adjusted for working days and seasonal changes, fell 4.4 percent from December, when they slipped 4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a decline of 4 percent, the median of 10 forecasts in a Bloomberg News survey showed.

Germany is battling its worst recession in more than 60 years as a global economic slump curbs exports, prompting companies to scale back output and eliminate jobs. Salzgitter AG, Germany’s second-largest steelmaker, said last week it’s unlikely to break even in the first half as demand collapses.

“The global recession is showing its full impact on German export markets,” said Thorsten Polleit, chief German economist at Barclays Capital in Frankfurt. “Exports are in a free fall and we can’t even see the end of it.”

Imports fell 0.8 percent in January from the previous month, the statistics office said. The trade surplus widened to 8.5 billion euros ($10.8 billion) from 7.3 billion euros in December. The surplus in the current account, the measure of all trade including services, was 4.2 billion euros.

Exports to euro-area countries fell 17.4 percent from a year earlier while sales to non-EU countries were down 24.5 percent.

Orders Tumble

German plant and machinery orders from abroad plunged 47 percent in January from a year earlier, the biggest drop since data were first compiled in 1958, the VDMA machine makers association said on March 4. The country’s manufacturing industry shrank for a seventh month in February, a survey of purchasing managers showed, and business confidence dropped to a 26-year low.

The German economy shrank 2.1 percent in the fourth quarter, the most in more than two decades and the third consecutive quarterly drop.

“The depth of the recession will depend decisively on the extent to which private consumption can assume a stabilizing role,” the Bundesbank said in its latest monthly report.

Chancellor Angela Merkel’s government will spend about 80 billion euros on measures to stimulate growth including tax cuts and subsidies to encourage consumers to buy new cars.

Still, with the unemployment rate rising to a nine-month high in February, spending may cool as consumers fret about job security.

“If you worry about losing your job, you are not going to go on a spending binge,” said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. “Some of the stimulus package elements may work, but they will not sufficiently offset the decline in exports.”

To contact the reporters on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net; Jana Randow in Frankfurt jrandow@bloomberg.net.