Friday, 16 March 2012

Euro Zone Exports Rise For Third Straight Month

03/16/2012 | 06:56am

-- Euro-zone exports rise for third straight month in January
-- Data supports hopes manufacturing will support economy
-- Trade deficit wider than expected as imports rebound

LONDON -- A third straight rise in euro-zone exports in January bolstered hopes that manufacturers will help the region avoid a severe downturn, while a rebound in imports offered a tentative sign domestic demand is on the mend.

The 17-nation currency bloc posted a trade deficit of EUR7.6 billion in January, the European Union's statistics agency Eurostat said Friday. That's smaller than the EUR16.1 billion gap recorded in January 2011 but more the EUR7.0 billion shortfall predicted in a survey of analysts by Dow Jones Newswires.

The euro zone typically posts trade deficits in winter months due to large imports of fuel and energy. The winter of 2010/2011 was particularly cold, and the EUR16.1 billion trade deficit for that January was the highest on record.

Exports in January 2012 rose 1.3% in seasonally adjusted terms, Eurostat said. That is the third straight monthly increase, and will raise hopes that strength in the region's manufacturing base will support the economy and limit the current downturn.

Data last week showed Germany, the region's biggest economy and manufacturing heartland, posting a strong rise in exports in January of 2.3%.

"The third successive rise in euro-zone exports in January boosts hopes that improving foreign demand will help the euro zone return to growth sooner rather than later," said Howard Archer, economist at IHS Global Insight, a consultancy. He said recent weakness in the euro will help exporters.

The bloc's economy contracted in the final three months of 2011, with six of its 17 nations already in recession--defined by two consecutive quarters of falling output.

A growing number of European leaders are calling for a renewed focus on fostering trade and other sources of growth, to offset cuts in government spending and help the region escape its long-running sovereign debt crisis. The heads of 12 governments including Italy and Spain, the third- and fourth-largest euro-zone economies, wrote to the European Commission in February calling for "concrete steps" to modernize the economy, including new trade deals with other countries around the world.

Imports to the euro zone in January jumped 2.4%, rebounding from four straight months of decline, Eurostat's figures showed. Those figures have been adjusted to exclude the effects of high energy imports, typical in the winter.

The rise in imports was one cause for the trade deficit being wider than expected in January. But Archer said it also offers a tentative sign that consumer demand--crucial to the euro zone's economic recovery--may be firming.

"This [rise] raises hopes that domestic demand may be stabilizing overall across the euro zone," he said.

But he noted "it is likely that import values were pushed up by higher prices."

-By Alex Brittain, Dow Jones Newswires; +44 20 7842 9203;