Europe’s Trade Surplus Increases as Exports Rise 4.1%

By Emma Ross-Thomas

Sept. 17 (Bloomberg) -- Europe posted a trade surplus for a fourth month in July as exports increased, adding to signs the region’s economy is starting to emerge from the recession.

Exports from the 16-nation euro area rose a seasonally adjusted 4.1 percent from June, when they gained 0.9 percent, the European Union’s statistics office in Luxembourg said today. July imports fell 0.3 percent after rising 0.2 percent in June. The trade surplus rose to 6.8 billion euros ($10 billion), the largest since 2004, from 2.3 billion euros in June. Construction output fell 2 percent in July, a separate report showed.

As evidence mounts that the global economy is recovering from the worst recession in 60 years, Germany and France returned to growth in the second quarter and euro-area gross domestic product fell just 0.1 percent after plunging 2.5 percent in the previous three months. Germany, the euro region’s biggest economy, relies on foreign sales for growth.

The euro edged higher against the dollar after the data were released. The European currency traded at $1.4737 at 10:27 a.m. in London, up 0.2 percent on the day.

Exports to the U.K., the largest market for euro-area goods, declined 27 percent in the first six months of 2009 from a year earlier, while shipments to China fell 5 percent. Sales to the U.S., the world’s biggest economy, dropped 21 percent, according to today’s report.

‘Exceptionally Low’

Federal Reserve Chairman Ben S. Bernanke said on Sept. 15 the worst U.S. recession since the 1930s has probably ended. The central bank has kept the benchmark lending rate as low as zero since December and in August said “exceptionally low” rates are likely warranted for “an extended period.”

Leaders of the Group of 20 nations next week will pledge to keep economic stimulus policies in place until a recovery is certain, President Barack Obama’s G-20 liaison said. The U.S. also will seek to phase out fossil-fuel subsidies and agree on how to rein in bankers’ bonuses, Michael Froman, a deputy assistant to Obama, said in an interview yesterday.

The European Central Bank has cut its key rate to a record low of 1 percent and started buying as much as 60 billion euros of covered bonds to stimulate bank lending and boost investments and consumption.

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net