Published by Global Banking and Finance Review
Posted on May 8, 2025
By Maria Martinez
(Reuters) -German exports rose more than expected in March as U.S. demand increased in anticipation of U.S. tariffs and a gain in industrial production also beat expectations, potentially pointing to an improvement in the sluggish sector.
Exports were up 1.1% in March over the previous month, data from the federal statistics office showed on Thursday. That just surpassed a forecast 1.0% increase in a Reuters poll.
Imports were down by 1.4% on a calendar and seasonally adjusted basis compared with February.
The German trade balance showed a surplus of 21.1 billion euros ($23.9 billion) in March, up from 18.0 billion euros in February.
Exports to EU countries rose by 3.1% on the month, while exports to countries outside the bloc declined by 1.1%.
Most German exports went to the United States, up 2.4% compared with February, as purchases were brought forward amid looming tariffs.
The far-reaching tariffs announced by the U.S. will deal a major blow to German industry. The U.S. was Germany's biggest trading partner in 2024, with 253 billion euros worth of goods exchanged between them.
Exports to China increased by 10.2% on the month.
INDUSTRIAL RECOVERY?
German industrial production rose in March by 3% compared with the previous month, the federal statistics office said on Thursday. Analysts polled by Reuters had predicted a 0.8% rise.
The less volatile three-month on three-month comparison also showed that production was 1.4% higher in the first quarter of 2025 than in the fourth quarter of 2024.
"It is therefore not just an increase that can be attributed to the usual volatility," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank AG. "After more than two years of recession, there is probably also a cyclical element here, which gives us some hope for the coming months".
German industrial orders rose more than expected in March, posting a 3.6% increase on the previous month, the federal statistics office said on Wednesday, which points to a recovery in demand.
March’s outturn confirms that conditions in German industry have at least stopped deteriorating, said Franziska Palmas, senior Europe economist at Capital Economics.
However, any boost from tariff front running is likely to fade soon and the sector will also continue to struggle with dwindling competitiveness and a structural decline in demand for autos, she added.
"The upshot is that we wouldn’t be surprised to see German industrial output contract again in the next six months or so," Palmas said.
(Reporting by Simon Ferdinand Eibach, Amir Orusov and Tristan Veyet in Gdansk; Editing by Ludwig Burger and Toby Chopra)
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