Euro area trade surplus widens more than expected in August

The euro area's foreign trade surplus with the rest of the world widened last month on the back of a sharp rise in the bloc's exports.

According to Eurostat, on a seasonally adjusted basis the Eurozone's trade surplus improved from €12.6bn for July to €16.6bn in August, on the back of a 2.1% month-on-month rise in the bloc's exports to €193.1bn.

Imports on the other hand were essentially flat, dipping by just €100m from the month before to reach €176.5bn.

Economists had forecast a smaller improvement in the trade surplus, to €14.4bn.

According to Claus Vistesen at Pantheon Macroeconomics, the decline to €12.0bn seen in the trade surplus in July was an "outlier" and the trend was likely closer to €15.0bn.

More interestingly, while the surplus had shrunk in a lagged reaction to the single currency's appreciation, that was now fading.

Indeed, it was now flipping into a boost, Vistesen said, with the trade-weighted euro now in retreat, albeit if only marginally so, when compared to last year's levels.

Even so, Vistesen added: "With respect to real net trade, we think external sector will be a drag on growth this year mean-reverting a from a jump in 2017.

"The evidence from Q3 so far suggests that net exports remained negative in Germany, while they rebounded in France."