German exports unexpectedly fall while industrial production rises

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By Maria Martinez

(Reuters) – German exports unexpectedly fell in July on a sharp decline in U.S. demand due to tariffs, while industrial output rose, data showed on Monday.

Exports from Europe’s biggest economy fell by 0.6% in July from the previous month, data from the federal statistics office showed. A Reuters poll had forecast a 0.1% increase.

Exports to the United States were down 7.9% from June. Germany’s export-oriented economy is expected to be badly affected by U.S. import tariffs. The U.S. was Germany’s biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($297 billion).

The U.S. imposed a 15% import tariff on most goods from the EU in a deal reached with the bloc in July to avert a bigger trade war between the two allies, which account for almost a third of global trade.

Another trading superpower, China, saw its export growth slow to a six-month low in August as a brief boost from a tariff truce with the U.S. faded, and China’s exports to the U.S. were down 33% year-on-year in August.

German exports to EU countries rose by 2.5% on the month, while goods to other countries outside the EU declined by 4.5%.

Ralph Solveen, senior economist at Commerzbank, said there was hope that German deliveries to other euro area countries would increase, meaning that exports overall would not slow the economy as much as some fear.

Imports fell 0.1% from June.

The foreign trade balance showed a surplus of 14.7 billion euros ($17.2 billion) in July, down from 15.4 billion euros in June and 17.7 billion euros in July 2024.

GERMAN INDUSTRIAL PRODUCTION RISES

Meanwhile, German industrial production rose by 1.3% in July from June. Analysts polled by Reuters had predicted a 1.0% rise.

The less volatile three-month on three-month comparison showed that production was 0.1% lower in May-July than in the previous three months.

A monthly fall in production in June was revised down to 0.1% from 1.9%. The statistics office attributed the revision partly to corrections from a large automotive firm.

“Hopes for at least a cyclical recovery in German industry remain alive,” said Carsten Brzeski, global head of macro at ING.

However, data issued on Friday showed German industrial orders unexpectedly falling for the third consecutive month, by 2.9% in July.

Commerzbank expected production to pick up on the back of interest rate cuts by the European and other central banks.

By next year at the latest, the German economy should also benefit from the expansionary fiscal policy of the new government, said Solveen.

“Even a potentially weaker August figure would not diminish this hope, as it would probably be due to relatively late factory holidays in the automotive industry,” he added. ($1 = 0.8534 euros)

(Additional reporting by Daria Bogdanska and Paolo Laudani in Gdansk; Editing by Friederike Heine, Emelia Sithole-Matarise and Kevin Liffey)