German exports fall at fastest pace in months

http://www.guardian.co.uk/business/2012/nov/08/german-exports-fall-pace-months

Version 0 of 1.

German exports fell in September at the fastest pace since late last year, official figures show, adding to evidence that the eurozone crisis has infected the continent's economic powerhouse.

It comes after recent data showed business sentiment had worsened, the private sector had contracted and industrial orders slumped. Adding to the gloom, Siemens said it would look for €6bn (£4.8bn) of cost savings and disposals to remain competitive.

September imports fell 1.6% and exports declined 2.5% month-on-month, seasonally adjusted data from the Federal Statistics Office showed. Overall exports were down 3.4% from a year earlier but orders from eurozone countries plunged 9.1%.

"The debt crisis has arrived in Germany: at year-end 2012, weaker demand from abroad comes on top of uncertainty that has weighed on investments since the summer of 2011," said Andreas Scheuerle at Dekabank.

"The trade figures are a normal consequence of the dramatically poor industrial orders, which have fallen at their sharpest rate in a year," said the analyst Jens Kramer at Nord LB.

Heiko Peters at Deutsche Bank underlined Germany's vulnerability to the debt crisis, pointing out that 40% of German exports go to the eurozone.

All economies of the single currency are struggling with austerity measures and firms are cutting orders for German products. In addition exports were hurt by slowing growth in China.

Christian Schulz at Berenberg Bank sees this development as a good sign. "We are experiencing a kind of rebalancing in the eurozone. Germany is losing competitiveness and for example Spain is gaining. Still, domestic demand is strong and the job market remains intact," he said.

Forecasts from the European commission on Wednesday suggest next year will not be any rosier for demand for German exports. The eurozone economy will barely grow, it said.

A lot of company news added to the evidence that Germany's export-oriented economy could get into trouble. The engineering conglomerate Siemens aims to save €6bn with cost cuts and disposals over the next two years as it fights to stay competitive in a weak global economy. This higher-than-expected goal to increase profitability sent Siemens' shares up almost 4% – one of the biggest gainers in Europe. Overall, fourth-quarter net profit from continuing operations fell by 2% to €1.48bn. The chief executive, Peter Loescher, announced that besides selling its solar units his company also wanted to dispose of the water businesses and buy the Belgian industry software maker LMS International for about €680m. Loescher also said there would be job cuts from the company's 410,000-strong workforce, but would not give details.

Industrial production accounts for a quarter of German GDP. Already-made cost cuts paid off for cement maker HeidelbergCement, where operating income in the three months through September rose 15% to €649m.

Further negative news came from the world's second-largest sportswear group Adidas, which trimmed its 2012 sales forecast amid a continuing sales slump at Reebok. It now expects a rise by a high single-digit percentage, compared with a previous forecast for a plus of almost 10%. Commerzbank, Germany's second biggest bank, cited the weakening European economy and said it would miss by far its original 2012 pre-tax target of €4bn. After nine months, the figure stood at €1.3bn. Deutsche Telekom stuck to its goals for 2012 despite a net loss of €6.9bn in the third quarter because of a €7.4bn impairment charge for its T-Mobile USA unit.