GERMAN DATA: Trade Data See Scope For Negative Q2 GDP Revisions On US Drag

The German trade surplus decreased in June to E14.9bln (seasonally-adjusted, vs E17.3bln cons; E18.5bln prior), the second lowest monthly level since May 2023. The decrease came as an import jump of 4.2% M/M (0.8% cons; -3.9% prior) outpaced a 0.8% M/M move in exports (0.4% cons; -1.4% prior), with those swings amplified by trade with the US. We note potential for a heavily caveated large drag from goods trade to real GDP in Q2, of note as net exports were not mentioned as a negative driver in the Destatis flash release when real GDP growth was weak at -0.1% Q/Q.

• As a % of nominal GDP on a 12-month rolling basis, the trade surplus extended its current downtrend, at 4.9% as of June, 1.0pp below levels seen around a year ago. That compares with a 2015 high of 8.0% and 2022 low of 2.1% (see bottom left chart).
• In terms of real GDP growth tracking, today's monthly constant price data point to a significant drag from goods net exports in Q2. A direct read through would see a ~1pp drag after +0.8pp in Q1 and an average -1.1pps in 2H24, although with a firm caveat that correlation with the quarterly GDP series hasn't been strong recently.
• Across countries and back on a nominal basis, the US stood out with exports to the country deteriorating materially for the third consecutive month whilst imports surged 20% M/M to their second highest value on record. It saw the Germany-US trade surplus narrow to 1.2% GDP over the past three months or 1.5% GDP over twelve months.
• The 6-month moving average of German exports to the US now sits at its lowest level since January 2024 having pulled back after the previous ramp-up on US tariff front-running.
• Imports picked up across countries on the month.
• IFO export expectations rose in July, to -0.1 (vs -3.6 June), but the print appears already outdated due to the announcement of broad-based 15% tariffs on EU imports to the US.