Euro-area exports declined in July, adding to signs of a recession after the economy was pushed into a contraction in the second quarter.
Exports from the 17-nation region fell a seasonally adjusted 2 percent from June, when they gained 2.4 percent, the European Union’s statistics office in Luxembourg said today. Imports slipped 1.2 percent and the trade surplus narrowed to 7.9 billion euros ($10.3 billion) from 9.3 billion euros.
European companies have seen waning demand as governments cut spending to plug budget gaps and the global economy shows signs of cooling. In the U.S., industrial output unexpectedly fell in August by the most since March 2009. The European Central Bank lowered its economic projections for this year and next on Sept. 6 and reiterated its pledge to buy government bonds along with the region’s rescue fund to help counter the region’s fiscal crisis.
“Slower global growth is increasingly weighing down on foreign demand,” said Howard Archer, chief European economist at IHS Global Insight in London. “This reinforces the belief that the euro zone is headed for further gross-domestic-product contraction in the third quarter given that growing exports was one of the few positives” in the first half.
The euro traded at $1.3099 as of 11:23 a.m. in Brussels, down 0.3 percent on the day. The single currency has lost 5 percent against the dollar over the past year. The Stoxx Europe 600 Index decreased 0.3 percent today.
German exports dropped 4.2 percent in July from the previous month, while Italy reported a decrease of 4.5 percent, today’s report showed. In France, shipments fell 0.2 percent. Greece had a drop of 7 percent, while Spain and Portugal reported gains of 1.4 percent. Irish exports advanced 1.5 percent from the previous month.
With companies seeking ways to lower costs and global demand faltering, the euro-area economy will shrink 0.2 percent this quarter after a similar contraction in the previous three months, according to the median of 21 economists’ forecasts in a Bloomberg News survey. Economic confidence dropped in August and manufacturing and service industries contracted. Unemployment held at a record high of 11.3 percent in July.
The economy may shrink 0.4 percent this year instead of a previously projected 0.1 percent, the ECB said this month. In 2013, GDP will probably rise 0.5 percent, half the pace projected in June, it forecast.
Exports to the U.S. rose a non-seasonally adjusted 12 percent in the first six months from a year earlier, while shipments to the U.K. increased 7 percent, today’s report showed. Exports to China and Russia surged 10 percent and 17 percent, respectively, while shipments to Japan climbed 16 percent. Detailed trade data are published with a one-month lag.
“We’ve seen a difficult economic environment over the past months partly because of a waning global dynamic,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “The situation will remain difficult in the second half.”
At a meeting late last week, European Union finance ministers in the Cypriot capital of Nicosia were deadlocked over the timetable for a more unified EU banking sector, with a German-led coalition pushing back against a more ambitious plan sought by France, Spain and Italy. The ministers also bickered over the terms of bailout requests and the role of the ECB.
Volkswagen AG (VOW) sales chief Christian Klingler said on Sept. 13 that the Wolfsburg, Germany-based carmaker is “monitoring the continued tense situation, particularly in Western Europe, very closely.”
Elsewhere, China’s imports unexpectedly fell in August from a year earlier and industrial output rose the least in three years, reports last week showed. Japan’s economy expanded in the second quarter at half the pace the government initially estimated, underscoring the risk of a contraction.
Citigroup Inc. cut its forecast for China’s 2013 growth to 7.6 percent from 8 percent on weakening external demand.
In the U.S., the world’s largest economy, industrial production fell 1.2 percent in August, according to data on Sept. 14. A separate report showed purchases cooled at retailers excluding auto dealers and gasoline service stations. U.S. employers added 96,000 workers in August after a 141,000 increase in the previous month.
Manufacturing in the New York area probably contracted in September at a slower pace, economists said before a report today. The Federal Reserve Bank of New York’s Empire State Index is forecast to have risen to minus 2 from minus 5.9 in August, with readings less than zero signaling contraction. The gauge covers New York, northern New Jersey and southern Connecticut.
The European Commission is scheduled to publish an initial estimate for euro-area consumer confidence for this month at 4 p.m. on Sept. 20 in Brussels.
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