By Paul Hannon
The eurozone's goods trade surplus narrowed in October as exports fell and imports rose, but the recent surge in the dollar against the euro suggests that may change.
The European Union's statistics agency said Friday that eurozone exports exceeded imports by EUR20.1 billion ($20.9 billion) in October, down from EUR23.5 billion in the comparable period a year earlier. Seasonally adjusted figures showed that exports fell 0.3% from September, while imports were up 2.9%, leading to a narrowing of the surplus to EUR19.7 billion from EUR24.4 billion.
This may be a blow to the eurozone's growth prospects as it entered the final quarter of a disappointing year. But if sustained, it could bewelcome news for critics, including many in the U.S., who argue that the eurozone relies too heavily on exports and too little on boosting domestic demand.
During his election campaign, U.S. President-elect Donald Trump pledged to introduce higher tariffs on imports from China and Mexico and reassess other trade relationships that he said placed U.S. workers at a disadvantage. He rarely mentioned the eurozone or Germany, even though both have large surpluses in their trade with the U.S.
Eurostat said Friday that the European Union, of which the eurozone is the major part, had a trade surplus with the U.S. of EUR93.8 billion in the 10 months to October, down from EUR102.6 billion in the same period of 2015.
More recent surveys suggest the decline in eurozone exports hasn't extended far beyond October, in part thanks to the jump in the dollar associated with Mr. Trump's victory and the expectation that stronger U.S. growth in 2017 will be accompanied by higher U.S. interest rates. The euro fell to its lowest level against the dollar since 2003 on Thursday.
A survey of eurozone purchasing managers for December released Thursday suggested the euro's weakness was boosting overseas sales. IHS Markit said its Purchasing Managers Index for the manufacturing sector--which is reliant on exports--hit its highest level since April 2011, while the increase in export orders during the month was the largest for over 5 1/2 years.
Eurostat confirmed its earlier estimate that the eurozone's annual rate of inflation increased to 0.6% in November from 0.5% in October, still well below the European Central Bank's target of just under 2%.
Write to Paul Hannon at email@example.com
(END) Dow Jones Newswires
December 16, 2016 05:14 ET (10:14 GMT)
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