Decline in German exports exceeds forecast on weak Eurozone demand

German exports contracted at a faster-than-expected pace in February as deep recession in the euro area weighed on demand for goods from the largest economy in the bloc.

Exports of goods declined a calendar-and-seasonally adjusted 1.5 percent month-on-month to EUR 90.4 billion in February, after rising 1.3 percent in January, the Federal Statistical Office said Tuesday. Economists had forecast a more modest decline of 0.3 percent for February.

Year-on-year, shipments fell by 2.8 percent in February, on a unadjusted basis, partially offsetting January's 3 percent increase.

Demand from euro area dropped 4.1 percent annually and imports from the 17-nation bloc were down 5.7 percent. Exports to the EU countries decreased by 3.4 percent.

The value of imports fell at a significantly faster rate of 3.8 percent monthly than the 0.1 percent decline economists had forecast and reversed January's 3.3 percent increase. Compared to February 2012, external purchases recorded a 5.9 percent decline, reversing January's 2.9 percent growth.

The net trade in February, on an unadjusted basis, resulted in a surplus of EUR 16.8 billion in February, higher than the EUR 14.9 billion surplus recorded a year earlier.

At the same time, provisional results of the Deutsche Bundesbank showed that the current account surplus increased to EUR 16 billion in February from EUR 13.5 billion in the same month a year earlier. Economists were looking for a surplus of EUR 14.2 billion.

The Purchasing Managers' survey for the month of March compiled by Markit Economics showed that Germany's private sector activity reached near-stagnation levels, with new orders dropping for the first time so far this year.

Although exports and imports declined in February, data from economy ministry revealed yesterday that industrial production increased 0.5 percent on rising manufacturing output, lifting hopes of recovery.