EUROPEAN DATA: Further Trade Surplus Normalization In May

Released yesterday (but with some issues getting hold of Eurostat data at the time):

• The Eurozone trade surplus was larger than expected in May at E16.2bn (SWDA, cons E14.0bn) after an upward revised E15.1bn (initial E14.0bn) in April.
• As hinted at in already released May trade data from major trading partners, it’s a second month of partial stabilisation after surpluses surged in Feb and Mar primarily on US tariff front-running of Irish pharmaceutical exports.
• Indeed, the average E15.7bn surplus over Apr-May compares with E28.8bn in March, E21bn in Feb, E13.4bn in Jan and an average E10.8bn in Q4 or E14.1bn in 2024 as a whole.
• It left goods trade surpluses worth ~1.2% GDP over Apr-May vs 1.6% GDP in Q1 and 0.8% GDP in Q4.
• Exports fell -0.5% M/M after a huge -8.4% M/M in April as that previous pharma surge unwound, whilst imports fell -1.0% M/M after -4.1% M/M (all swda figures).
• Latest exports weakness was commodities-led, with largest declines for crude materials (-6.0% M/M) and mineral fuels (-5.9% M/M, includes petroleum & petroleum products). Latest imports weakness was also partly in commodities (mineral fuels -6.9% M/M) whilst there was also -6.5% M/M drop in chemicals which looks like a lagged link to the previous surge in exports to the US.
• The broader EU trade data paint a similar picture, with a surplus of E13.4bn after E11.9bn in April following large surpluses in Feb and Mar (swda). It’s worth an average 0.8% GDP in Apr-May vs 1.1% GDP in Q1 and 0.5% GDP in Q4.
• The growing magnitude of Irish trade is clear to see: the extra EU surplus of 0.9% GDP over a rolling twelve-month basis is almost unchanged compared to a year ago. Over that period, the Irish trade surplus has doubled from 0.3% to 0.6% of EU GDP whereas the ex-Irish surplus has trimmed from 0.7% to 0.3% of EU GDP.
• EU imports from China remain elevated although narrowed their gap over 2024 levels as opposed to ramping higher. We don’t go into it here as have touched upon elsewhere with more timely data (see INTERNATIONAL TRADE: Still No Clear Signs of China-EU Trade Diversion In June – July 14).