German exports and industrial output both rose more sharply than expected in April, getting Europe's largest economy off to a strong start to the second quarter. But as Grace Pascoe reports sentiment across the rest of the euro zone weakened.
G7 world leaders have been savouring German hospitality. And now Merkel has reason to celebrate too. The German economy has beaten it's April forecasts for exports and industry output. Seasonally adjusted exports jumped 1.9 percent and imports fell 1.3 percent - widening the trade surplus to more than 22 billion euros. Jane Foley of Rabobank agrees the data is better than expected but has some concerns... SOUNDBITE (ENGLISH) RABOBANK, SENIOR CURRENCY STRATEGIST, JANE FOLEY, SAYING: "If we look at the Chinese trade data which came out today and look through that then they suggest imports from Germany were down and that perhaps doesn't leave a good precedent for future trade data, next month or the month after." There was disappointing data for the rest of the euro zone. Sentix's research shows morale among investors and analysts slipped to just above 17 points in June from close to 20 in May. The Greek debt crisis and a slightly firmer euro were partly to blame. SOUNDBITE (ENGLISH) RABOBANK, SENIOR CURRENCY STRATEGIST, JANE FOLEY, SAYING: "There are concerns with the reflationary story in the euro zone and if we look at the inflation data improvement in the euro zone well actually that suggests that there is costs to push inflation which is far less welcome than demand pull inflation and that is not a happy ending for Europe either." But sentiment remains significantly higher than at the start of the year. And Germany's foreign trade may also help boost its GDP from an expected 0.3 percent to 0.5 percent.