BERLIN (Reuters) - German imports fell sharply for the second time in three months in June and exports also dropped, data showed on Wednesday, adding to signs the single currency bloc’s crisis is beginning to hurt Europe’s largest economy.
Imports slumped by a seasonally adjusted 3.0 percent on the month, data from the Federal Statistics Office showed, reversing a 6.2 percent gain in May and falling much more sharply than the 1.5 percent drop forecast by economists in a Reuters poll.
Exports fell a seasonally adjusted 1.5 percent on the month, in line with expectations. A purchasing managers’ survey last week showed new export orders falling for a 13th straight month amid softer demand from China and the United States.
“This is a correction of May’s strong increase. We will see a falling trend in demand in the coming months, particularly from the euro zone countries,” said Citigroup’s Juergen Michels, adding that he still expected exports to grow this year.
Coming on the heels of worse-than-expected industrial orders for June, the trade data pointed to weakness in Europe’s growth engine and paymaster as the euro zone crisis and austerity measures implemented in struggling states bite.
Shipments to euro zone countries, which make up around 40 percent of all German exports, fell by 3.0 percent year-on-year in June but exports to non-euro zone countries were up 4.8 percent, the data showed.
Austerity-hit businesses and consumers in struggling euro zone countries have imported fewer goods of late and Spain’s May current account data, published last week, pointed to plummeting domestic demand, with Spain importing 2.1 percent fewer goods on the year.
German manufacturers have also been feeling the effects of a slowdown in China, with BASF (BASFn.DE), the world’s top chemicals maker, receiving no major orders from China this year and Siemens (SIEGn.DE), Europe’s biggest engineering conglomerate, saying major sales to China were becoming rare.
Still, economists expect demand from emerging markets to help cushion the trade blow from Europe.
“If things cool down outside of Europe then exporters will feel it. But we haven’t seen that yet in orders data,” said Stefan Kipar of BayernLB.
Wednesday’s import figures dampened hopes, raised by a recent survey showing consumer morale in Germany inched up heading into August, that domestic demand will help buoy the economy through a slowdown in the euro zone and Asia.
Imports slumped by 4.9 percent in April, before rebounding in May, and then retreating again in June.
Germany’s economy has traditionally been export-driven but many economists expect private consumption to be the most important driver of growth this year as Germans benefit from low unemployment and higher pay in the chemical and engineering sectors following successful wage negotiations.
The sharp fall in imports widened the seasonally-adjusted trade surplus to 16.2 billion euros from an upwardly revised 15.3 billion in May, beating the consensus forecast in a Reuters poll of 21 economists for 15.0 billion euros.
While the German economy put in a strong performance in the first three months of the year, saving the euro zone from recession by growing 0.5 percent, recent data has been downbeat.
Sentiment surveys have taken a turn for the worse, with the closely-watched Ifo business climate index hitting its lowest in more than two years in July. Retail sales have also fallen and the number of Germans out of work has increased.
Data last week showed Germany’s manufacturing sector shrank in July at its fastest pace in more than three years as firms received fewer new orders and output flagged while new orders in the service sector declined to their weakest level in just over three years.
But economists said there was still hope on the horizon.
“Economic growth may have slowed in the second quarter, but not dramatically. We are expecting to see growth of 0.3 or 0.4 percent after growth of 0.5 percent at the start of the year,” Michels said.
Reporting by Michelle Martin; Editing by Noah Barkin