German exports rose more than expected in February

Data on Tuesday showed a much bigger-than-expected rise in German exports in February, thanks to strong demand from the United States and China, marking their biggest increase in 10 months.

The Federal Statistical Office said exports increased 4 percent compared to the previous month. A Reuters poll had forecast a monthly increase in exports of 1.6 percent. Exports rose 2.5 percent month on month in January.

“The export sector has returned to the growth path, and the sharp setback in December has been compensated,” said Alexander Krueger, chief economist at Hawke-Aufhauser Lamb. Exports fell 6.1 percent month-on-month in December.

In February, exports to European Union countries increased by 2.0 percent from the previous month, and exports to the United States and China increased by 9.4 percent and 10.2 percent, respectively, compared to January.

Imports grew by 4.6 percent compared to January, the office said, against analysts’ expectations for a 1.0 percent rise. The increase comes after contracting for five consecutive months.

The foreign trade balance showed a surplus of 16.0 billion euros ($17.42 billion) in February, unchanged from the previous month and up from 10.7 billion euros in the same month of the previous year, both in terms of calendar and seasonally adjusted data.

Supply chain problems, energy crisis and geopolitical risks are expected to affect exporting companies this year.

The German Chamber of Commerce and Industry expects real export growth of 2.5 percent in 2023, one percentage point below the average growth over the past decade.

Sentiment among German exporters improved somewhat in March, with Germany’s Ifo Institute forecast for exports rising to 4.0 points from 3.5 points in February.

Klaus Vollrabe, head of surveys at the institute, said that despite the increase, demand for exports still lacked momentum.