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UPDATE 1-Euro zone trade surplus up, exports seen stabilising

Published 06/17/2009, 07:41 AM
Updated 06/17/2009, 07:48 AM

(Adds economists' comments)

By Jan Strupczewski

BRUSSELS, June 17 (Reuters) - The euro zone's unadjusted external trade surplus rose in April as exports showed signs of stabilising on a monthly basis and fell less than imports, though shipments sank more than a quarter from a year earlier.

The surplus in the 16 countries using the euro came to 2.7 billion euros ($3.75 billion), compared with an upwardly revised 1.8 billion euro surplus in March and a 2.2 billion surplus in April 2008, European Union statistics office Eurostat said.

Unadjusted exports fell 27 percent year-on-year to 102.1 billion euros and imports dropped 28 percent to 99.4 billion.

Seasonally adjusted, the trade balance continued a trend of narrowing deficits since January. The gap shrank to 300 million euros from March's 1.8 billion as exports fell only 1.3 percent month-on-month and imports declined 2.7 percent.

"Taken together, the last three months suggest that exports are starting to stabilise after they fell off a cliff between October of last year and January of this year," said Nick Kounis, economist at Fortis.

The euro zone economy contracted 2.5 percent quarter-on-quarter in the January-March period -- its deepest fall on record -- in what economists said was likely the low point of the recession.

Negative trade on the back of exports plunging faster than imports lowered the quarterly result by 0.3 percentage point.

"A poor net trade performance has contributed to the euro zone's deep economic contraction," said Howard Archer, economist at IHS Global Insight.

"Plunging domestic demand in Britain and the United States, as well as substantially deteriorating activity in emerging Europe, has been a particular concern for euro zone exporters," Archer said.

Detailed data for April was not yet available but a country breakdown for January-March showed the euro zone's trade surplus with its biggest trading partner, Britain, fell to 12.2 billion euros from 15.0 billion a year earlier.

The surplus more than halved with the United States, the single-currency area's second-biggest trade partner, to 4.9 billion.

The trade deficit with energy exporter Russia more than halved to 5.4 billion euros from a year before as oil and gas prices plunged.

The euro zone's trade gap with China contracted to 26.4 billion euros in the first quarter from 27.5 billion a year before.

Separately, Eurostat said construction output in the euro zone rose 0.6 percent month-on-month in April for the second month running, limiting the year-on-year drop to 4.7 percent versus 8.3 percent in March and 12.5 percent in February.

"Although construction data are notoriously volatile, there are clear signs that the pace of contraction is slowing. We expect the overall economy to contract at a much slower rate in Q2 than it did in Q1 before stabilising in the second half of the year," Kounis said. (Editing by Dale Hudson)

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