Seasonally adjusted results:

May: -E3.0 billion

MNI survey median: +E1.1 billion
MNI survey range: -E2.0 bln to +E3.0 bln

April: +E0.1 bln (revised from +E1.4 bln)
March: +E0.3 bln (revised from E0.0 bln)
February: +E2.4 bln (unrevised)
January: +E1.2 bln (revised from +E0.9 bln)
December: +E2.8 bln (revised from +E3.0 bln)

Non-seasonally adjusted results:

May: -E3.4 billion
April: +E2.2 bln (revised from +E1.8 bln)
March: +E3.8 bln (revised from +E4.5 bln)
February: +E1.9 bln (revised from +E2.5 bln)
January: -E9.4 bln (revised from -E9.1 bln)
December: +E4.1 bln (unrevised)
—

FRANKFURT (MNI) – The Eurozone’s trade balance fell into deficit in
May for the first time since February 2009, as the rebound in imports
far outpaced that of exports, Eurostat said Friday, noting a marked
downward revision to April’s surplus.

While most analysts had expected a decline in the trade balance,
none had forecast a deficit of this size.

Since April, imports rebounded 4.2% in seasonally adjusted terms,
fully recovering from the previous month’s slide. While exports also
recovered, the 1.6% rise was not enough to offset import demand, leaving
the trade balance at a deficit of E3.0 billion, the biggest shortfall
since January 2009.

In non-seasonally adjusted terms, the trade balance registered a
deficit of E3.4 billion following April’s upwardly revised E2.2-billion
surplus.

After contributing to the Eurozone recovery over most of last year,
foreign trade slashed half a point from GDP growth in 1Q due to an
upturn in the inventory cycle.

Yet, with domestic demand expected to remain sluggish this year,
the economy will remain dependent on external stimulus to keep the
recovery on track, France’s national statistics office and the leading
private institutes in Germany and Italy predicted earlier this month.

While the three institutes, like most analysts, expect demand from
many emerging economies to weaken in the second half, the previous slide
of the euro should help limit the downside risks.

The ECB also expects “some moderation in the growth momentum” later
this year “as the impact of temporary factors such as the favourable
inventory cycle and the policy stimulus fades.” The central bank sees
signals for a “slowdown in economic expansion in advanced and emerging
economies” in coming quarters, but does not rule out a surprise to the
upside.

Leading indicators point to fairly dynamic foreign demand in the
near term, despite some recent cooling. The Eurozone factory PMI showed
ongoing export order growth, though slowing in June (55.8) from the
10-month peak in hit in April (58.6).

Manufacturers polled by the European Commission in June said
foreign order books had improved for the 12th month in a row, but that
levels remained somewhat below the long-term average.

In Germany, foreign orders dipped 0.5% in May. However, the
weakness in demand was strictly Eurozone-based, with orders from outside
the monetary union up nearly 2% since April, adding to the previous 6.0%
jump.

While export expectations in Germany’s manufacturing sector eroded
somewhat in June, they remained well above the long-run average, the Ifo
institute noted, suggesting that foreign demand will continue to drive
industry output.

French manufacturers polled in June by Insee reported a significant
improvement in recent export orders, reflecting mainly a recovery in the
auto sector but also for some semi-finished goods. However, foreign
order books are still considered much lighter than normal.

Italian manufacturers surveyed by ISAE said export orders improved
slightly in June after a marginal setback in May. Export expectations
improved somewhat as well. The factory PMI also signaled stronger export
order growth in June (55.0) after a slowdown in May.

— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —

[TOPICS: M$X$$$,M$XDS$]