German Exports Tumble Despite Surprise Factory Output

Germany's economy sent conflicting signals in November, as a sharp, unexpected drop in exports contrasted with a surprising rise in industrial output. Data released by the federal statistics office revealed that shipments from Europe's largest economy fell, weighed down by weaker demand from the United States and other European Union nations.

Exports Fall Sharply as Trade Surplus Narrows

German exports contracted by 2.5% in November compared to the previous month, a stark reversal from analyst expectations of no change. At the same time, imports rose by 0.8% on a calendar- and seasonally-adjusted basis.

This dynamic squeezed Germany's foreign trade balance, which posted a surplus of €13.1 billion for the month. The figure marked a significant decline from the €17.2 billion surplus recorded in October and the €20.0 billion surplus from November 2024.

US Shipments Plummet While Imports from China Surge

The export weakness was driven by a 4.2% month-on-month decline in shipments to both the United States and fellow EU countries. Exports to nations outside the bloc experienced a more modest drop of 0.2%.

On a year-over-year basis, the trend was even more pronounced. Compared to November 2024, German exports to the U.S. plummeted by 22.9%. These figures follow the U.S. administration's imposition of a 15% import tariff on most goods from the 27-nation bloc.

In contrast, imports from China to Germany climbed 8.0% compared to the previous month, an influx that has gathered momentum since the U.S. imposed its own tariffs on China.

Factory Output Rises, Defying Market Expectations

While trade figures disappointed, Germany's industrial sector showed unexpected resilience. Industrial production grew by 0.8% in November from October, directly contradicting analyst forecasts of a 0.4% decline.

This positive indicator was supported by separate data showing that German industrial orders had climbed 5.6% in November, driven by a series of large-scale orders.

Can Germany's Industrial Rebound Last? An Analyst Weighs In

Despite the encouraging production numbers, some economists urge caution. Franziska Palmas, senior Europe economist at Capital Economics, acknowledged that conditions in German industry improved toward the end of last year but questioned if the upturn could be sustained.

"Given the significant structural headwinds facing the sector, we doubt this is the start of a sustained recovery and still expect German industrial output to decline in the medium term," Palmas commented.