German exports fall 25 percent in May; June CPI up

[July 09, 2009]  FRANKFURT (AP) -- German exports fell sharply in May as the global recession cut into demand, while consumer prices in June inched up somewhat, the Federal Statistical Office said Thursday.

The Wiesbaden-based office said exports from Europe's largest exporter declined by a quarter in May, while imports dropped 23 percent compared with May 2008.

The office said that compared to April, exports rose a slight 0.3 percent and imports decreased by 2.1 percent.

"The recession continued in the second quarter 2009 but clearly lost its brutality," said Andreas Rees, an economist at UniCredit in a research note, adding that "we do not think that there is any reason to be overly disappointed."

"First of all, it is obviously only a question of time before exports will start to jump. Foreign new orders rose so rapidly in May that it is very likely that exports will follow suit. Our best guess is that the June export figure will already show a strong rise," Rees said.

Rees also said he thought more long-standing economic growth, including more exports, is within reach because the global economy should pick up more strongly after the summer break as companies get back to work full strength for the second half of the year.

Furthermore, fiscal stimulus packages should also start to have more of a pronounced effect. Both scenarios should contribute to labor market growth as well, he said.

In a separate report, the Statistical Office said consumer prices in June rose a slight 0.1 percent compared with the same month a year ago, while consumer prices compared with May rose 0.4 percent.

Low inflation during June was largely a result of varying trends in mineral oil prices, which were far below the record prices of 2008, but prices for food and tobacco prevented a further decrease in the overall inflation rate and was the main reason for price stability compared with the same period last year, it said.

Meanwhile, energy prices on a whole fell nearly 8 percent compared to June a year ago, although electricity prices alone rose almost 7 percent, the numbers showed.

Food prices were nearly 1 percent lower compared to June a year ago, but rose for the first time since the start of this year, the office said, while prices for services rose 1.3 percent and prices for consumer durable goods remained unchanged.

Earlier in the week, the Economy Ministry offered several hopeful signs for Europe's largest economy, reporting that industrial production rose by 3.7 percent in May compared with April, while industrial orders increased by a healthy 4.4 percent in May compared with April.

Slack demand for German manufactured products was a key reason for the export-dependent economy's slide into recession over recent quarters.

___

On the Net:

http://www.destatis.de/

[Associated Press; By GEORGE FREY]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.