Weekly Export Risk Outlook


​In the headlines:
- Eurozone: Demand remains weak
- US: Latest economic data
- Germany: Fewer start-ups in Q1
- Iran: Election result

Figure of the week: EUR 14.9bn - Eurozone trade surplus in April

​Eurozone: Demand remains weak

Industrial production increased by +0.4% mo/mo in April, slightly above consensus expectations (0%) and marking the third consecutive monthly increase. In June, the economic expectations indicator (ZEW) increased by three points to 30.6, while the current conditions indicator was slightly down. However, while the supply side of the economy shows some positive signs, it remains constrained overall by the weakness in demand. Employment decreased by -0.5% q/q in Q1, suggesting domestic demand is not likely to recover strongly in the short term. Likewise, external demand was also weak in April, as exports were down by -EUR4.1 billion but imports were up, with a resulting surplus in the merchandise trade balance of EUR14.9 billion from EUR22.5 billion in March. Encouraging signs come from consumer prices, with annual inflation remaining at low levels (+1.4% y/y in May), which may help encourage some pick-up in internal demand from a resulting improvement in purchasing power.

US: Latest economic data

Recent data are mostly weak, with consumer sentiment falling in the first half of June, manufacturing data from the Fed’s New York region lacklustre and industrial production was flat in May (with manufacturing increasing by only +0.1% mo/mo). In contrast, May retail sales were a bit stronger than expected at +0.6% mo/mo, although on a yr/yr basis the trend is still weak, especially if autos are excluded. The one strong report from recent releases, unsurprisingly, was from the housing market, the single bright spot in the economy. The housing market index survey increased sharply in June, showing a majority of homebuilders are optimistic about the industry and by the greatest margin in seven years. All eyes now turn to the Fed on Wednesday for more clarity about the future of quantitative easing programmes.

Germany: Fewer start-ups in Q1

According to the first provisional results released by the Federal Statistical Office, almost 35,000 large businesses (ones that are considered to provide a marked contribution to the overall economy) were founded in Q1, representing a decline of -7.6% y/y. In addition, the number of newly-formed small businesses fell even more sharply, by -8.8% to 60,000. By contrast, start-ups of parttime businesses increased by +2.1% to 65,900. Data on company closures show that business de-registrations in the first three months decreased by -2% y/y (to 33,500) for large businesses, decreased by -4.2% y/y (to 77,100) for small businesses but the number of de-registrations of part-time farms increased by +12% (to 45,500).

Iran: Election result

Presidential elections (14 June) resulted in an outright win (without recourse to a run-off) for Hassan Rohani (18.6 million votes, almost 51% of the total) who will succeed incumbent Mahmoud Ahmadi-Nejad in August. Rohani’s victory followed pre-election alliances within the moderate camp, which fielded just a single candidate, but it also indicates a general level of electorate disenchantment with hardline fundamentalism. Rohani’s initial pledges include greater transparency over nuclear activities and easing in tensions that led to sanctions against the country. His election may help forestall a possible pre-emptive strike against nuclear sites in Iran. Whether he is a moderate or not is yet to be seen but, in any event, Supreme leader Ayatollah Ali Khamenei retains overall authority.