German Trade Surplus Drops to 5-month Low, Spanish Jobless Falls to 15-year Low

Bridgette Randall
04 Jul, 2023
Frankfurt

European markets edged slightly lower in thin trading and investors digested a fresh batch of economic data in the region. 

Spain's registered unemployed people remained below 3 million for 14th month in a row in June and Germany's trade surplus declined to a five-month low after exports fell to the U.S, UK and China. 

Trading on European bourses was thin because of the July 4 Independence Day holiday in the U.S.

Crude oil traded near its recent lows on persistent demand growth worries following the uneven economic rebound in China after the end of Covid-19 restrictions. 

The Reserve Bank of Australia held its cash rate at 4.1% following the policy meeting today after increasing rates by 25 basis points to in the previous meeting in June and increasing by a total of 400 basis points since May 2022. 

 

Spain's Jobless Rate Declined 

Spain's jobless rate fell by 1.8% or 50,268 people from the previous month in June to 2.69 million, the lowest level since September 2008, the Ministry of Labor and Social Economy reported Tuesday. 

From a year ago, the number of people registered as jobless  fell by 191,740  and the decline was widespread in all age groups and across all regions of the nation. 

The registered unemployed people stayed below 3 million for the 14 month in a row. 

The number of unemployed in services declined by 42,133, in industry by 4,888 and construction 1,688. 

Across regions, the largest decline was registered in Andalusia by 8,780, Catalonia by 6,359 and Galicia by 5,410. 

In the first half of 2023, 7.6 million job contracts have been signed, 2 million fewer than a year ago. 

 

German Trade Surplus Falls to 5-month Low 

Seasonally adjusted German trade surplus decreased to Є14.5 billion in May from downwardly revised surplus of Є16.5 billion in April and Є4.4 billion a year ago. 

Trade surplus was the smallest since last December. 

Exports declined 0.1% from the previous month to Є130.5 billion after sales to member states in the EU declined 1.5% to Є70.3 billion and rose 1.5% to Є60.5 billion.  

On a yearly basis, exports declined 4% in May after falling 1.7% in April and imports dropped 10.6% after declining 11.2% respectively. 

Most German exports went to the U.S. and sales decreased 3.6% to Є12.7 billion, fell 1.6% to Є8.6 billion to China and 5.8% to Є6.4 billion to the UK. 

Overall imports increased 1.7% to Є116.1 billion after imports from the member states of the EU increased 3.5% to Є61.6 billion and from the non-member states decreased 0.3% to Є54.5 billion. 

Most German imports came from the People's Republic of China and imports declined 2.7% to Є13.3 billion, followed by the United States and the UK. 

Imports from the U.S. declined 5.7% to Є7.6 billion and from the UK fell 15.3% to Є3.3 billion.   

Exports to the Russian Federation declined 7.4% from the previous month to Є0.7 billion and plunged 34.4% from a year ago after Russia invaded Ukraine.  

Imports from Russia declined 17.3% to Є0.3 billion from the previous month and plunged 92.6% from a year ago. 

 

Europe Indexes & Yields 

The DAX index decreased 0.3% to 16,042.66, the CAC-40 index declined 0.06% to 7,381.09 and the FTSE 100 index increased 0.1% to 7,537.54. 

The yield on 10-year German Bunds inched higher to 2.47%, French bonds traded lower to 3.02%, the UK gilts edged up to 4.44% and Italian bonds decreased to 4.22%.

The euro edged higher to $1.09, the British pound to $1.27 and the U.S. dollar fetched 89.56 Swiss cents

Brent crude increased $0.6 to $75.26 a barrel and the Dutch TTF natural gas increased €0.22 to €34.14 per MWh.

 

Europe Stock Movers

Mining and energy companies were among the leading decliners after commodities and energy prices remained under pressure on the demand worries linked to China. 

Glencore, Antofagasta and Anglo American rose between 0.6% and 1.1% on the hopes that the People's Republic of China will announce new measures to revive the property sector. 

Shell Plc, TotalEnergies, BP Plc, Eni SpA and Repsol traded volatile and in mixed trading and bounced around 0.5% band. 

UK homebuilders were under pressure on the looming recession worries and slowdown in home sales amid the ongoing rate hikes. 

Barratt Developments Plc fell as much as 0.4% and Taylor Wimpey Plc decreased 0.3% 

Wizz Air Holdings Plc increased 2% to 2,853 pence after the deep discount airline reported a higher passenger traffic in June compared to a year ago. 

Casino Guichard Perrachon SA soared 16% to €4.57 after the troubled French retailer received two equity investment offers. 

J Sainsbury Plc decreased 2.0% to 269.0 pence despite the British retailer reported improved first quarter results and reiterated its full-year outlook. 

Aegon NV rose 1.7% to €4.80 after the Dutch insurer said it has integrated its pension, life and non-life insurance, mortgage and banking activities with ASR.