* Exports, imports fall more than expected in September
* German economy no longer immune to euro crisis
* Exports unlikely to improve soon given dark European
* Domestic demand unlikely to provide strong boost to
By Sarah Marsh
BERLIN, Nov 8 German exports slid in September
at the fastest pace since late last year, hit by declining
demand among its crisis-wracked euro zone trading partners.
Imports also fell, adding to evidence that the crisis is
inflicting a heavy toll on the currency bloc's largest economy.
The trade figures come after a string of disappointing data
for Europe's economic powerhouse. Business sentiment has
worsened, the private sector has contracted, joblessness has
risen and industrial orders have fallen at their sharpest rate
in a year.
"The debt crisis has arrived in Germany: At year-end 2012,
weaker demand from abroad comes on top of uncertainty that has
weighed on investments since the summer of 2011," said Andreas
Scheuerle at Dekabank.
Imports fell 1.6 percent and exports declined 2.5 percent,
data from the Federal Statistics Office showed on Thursday,
undercutting forecasts in a Reuters poll of economists for
declines of 0.1 percent and 1.5 percent respectively.
The seasonally-adjusted trade surplus narrowed to 17.0
billion euros from 18.1 billion in August. The consensus
forecast was for it to narrow to 16.8 billion euros.
For a long time Germany's economy seemed impervious to the
euro zone's troubles, but it is now succumbing.
Many economists now expect it to contract in the fourth
quarter, a potential headache for Chancellor Angela Merkel
before next year's federal election.
Exports had managed to hold up fairly well this year, and
have fallen in only four out of nine months, as demand from Asia
has compensated for a weaker appetite in European countries
struggling with austerity measures.
But Thursday's data suggests this will no longer suffice.
Germany's export-oriented companies have bemoaned weakening
demand from Europe during this earnings season, with tyre maker
Continental saying it would have to scale back output
and steel maker Salzgitter cutting its outlook.
Forecasts from the European Commission on Wednesday suggest
next year will not be any rosier for demand for German exports.
The euro zone economy will barely grow, it said.
Figures from France on Thursday showed the country's trade
deficit narrowed in September, helped by lower energy imports
and a jump in Airbus sales, although they masked falls in nearly
all industrial exports.
A breakdown of the German trade data on an unadjusted basis
showed exports to the euro zone slumped 9.1 percent on the year,
even as exports to countries outside Europe rose 1.8 percent.
"Signs are increasing that gross domestic product could
shrink tangibly in the fourth quarter after expanding slightly
in the third," said Ulrike Rondorf at Commerzbank.
EURO CRISIS HITS DOMESTIC DEMAND
The drop in imports, which undercut even the lowest forecast
in the Reuters poll, raises questions about the ability of
domestic demand to prop up growth during the euro zone crisis,
as many had hoped.
Christian Schulz of Berenberg Bank said the fundamentals for
domestic demand remained strong, with unemployment still close
to a 20-year low and wages rising for the first time in years.
Consumer morale hit its highest level in over five years going
into November, according to market research group GfK.
But Schulz said the euro crisis was nonetheless restraining
private consumption and impacting companies' willingness to
invest in the short-run.
"The fundamental outlook is good, the problem is really
confidence which has been under pressure this year because of
the crisis," said Schulz.
"We are not expecting a major boost from consumption next
year, but continued moderate growth, and we expect a rebound in
investment over the course of the year but it may take time
until businesses believe the euro crisis will be resolved."
The HDE retail association said on Thursday it expected
retail sales to have risen 1.5 percent in 2012 in nominal terms,
but to have fallen 0.5 percent in real terms.
Sales would rise 1.5 percent to a record 80.4 billion euros
in the key Christmas season, but HDE President Josef
Sanktjohanser said, noting that this underscored the robust
state of the branch despite worries about the economy.
Unemployment may be historically low, but data last month
nonetheless showed it rose for a seventh month running.
Adidas, the world's second-largest sportswear
group, on Thursday trimmed its 2012 sales forecast, while Metro
last week reported a bigger-than-expected plunge in
quarterly profit, warning that the outlook, even at home, was
Germany's government last month slashed its forecast for
growth next year to 1.0 percent, and its panel of economic
advisers this week even undercut that estimate, forecasting
expansion of 0.8 percent.