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UPDATE 2-Exports help limit euro zone Q2 GDP contraction

Published 08/17/2009, 08:51 AM
INVP
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* 4.6 bln eur trade surplus in June is third in a row

* Exports underpin economy in Q2

(Adds seasonally adjusted figures)

By John O'Donnell and David Brunnstrom

BRUSSELS, Aug 17 (Reuters) - The euro zone posted its third successive monthly trade surplus in June, adding to evidence that foreign demand was helping the area to emerge from recession.

The 16 countries that use the euro currency recorded a surplus of 4.6 billion euros ($6.5 billion) in June, according to seasonally unadjusted data from the European Union's statistics office Eurostat, after a 2.1 billion surplus in May.

Unadjusted euro zone exports in June were still 22 percent lower than a year earlier at 106.1 billion euros, up from 98.6 billion euros in May.

But they fell less than imports, which declined 26 percent to 101.5 billion euros on the year in June against imports worth 96.5 billion euros in May.

Adjusted for seasonal factors, the trade surplus was 1 billion euros, down from 1.1 billion in May, as imports stayed flat against May while exports edged marginally lower by 0.1 percent on the month.

June was the third successive month when the euro zone exported more than it imported, indicating that global demand is pulling the region out of recession.

It comes after a return to growth in Germany, Europe's biggest exporter, and France, helped limit the economic contraction in the whole of the euro zone economy in the second quarter. [ID:nLD484296]

Data released earlier this month showed manufacturing orders in Germany rose at their fastest pace in two years, boosted by strong foreign demand.

Economists gave the figures a guarded welcome.

"We've seen some pick-up come through in global activity which is feeding in to a pick-up in euro zone activity," said David Page at Investec in London.

"It is encouraging that there are some signs that the export front is starting to ease a bit," said Colin Ellis, European economist at Daiwa Securities SMBC. "But I think I'd be cautious about jumping on the bandwagon too much."

Some figures detracted from the positive picture as year-to-date surpluses with key trading partners were sharply lower than a year ago.

"Fundamentally the euro area's two biggest markets are still the UK and the US and until demand recovers there I don't think you are going to see a strong recovery," said Ellis.

Detailed data for June was not yet available but unadjusted figures for the January-May period showed that the euro zone's trade surplus with Britain, its biggest trading partner, fell to 19.8 billion euros from 25.1 billion a year earlier.

With the United States the trade surplus more than halved to 9.7 billion. (Reporting by David Brunnstrom and John O'Donnell; additional reporting by Christina Fincher and Kylie MacLellan; Editing by Jon Boyle)

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