Eurozone trade surplus soars

The eurozone's foreign trade surplus soared more than expected in June from May, data showed on Tuesday, as exports grew twice as fast as imports despite a strong euro.
The 13-nation single currency area's seasonally unadjusted trade surplus increased to 7.8 billion euros ($10.53 billion) from 1.7 billion euros in May, European Union statistics office Eurostat said.
Analysts polled by Reuters had expected a 3.5 billion euro surplus. Eurostat said exports grew by 9 percent year-on-year while imports rose 4 percent, while the eurozone's internal cross-border trade grew by 5 percent.
"The main thing is that exports continued to improve and they are probably one of the main building blocks of expansion in the euro area, but so far this year they are not as dynamic as last year," said Jose Alzola, economist at Citigroup.
Rises in European Central Bank interest rates strengthened the euro against the US dollar and the Japanese yen in the second quarter of the year, prompting complaints from some politicians that the exchange rate was hurting exports. The currency has since weakened.
Eurostat said the seasonally adjusted trade surplus grew to 5.3 billion euros in June from 3.9 billion in May as exports increased by 1.7 percent and imports by 0.7 percent. The data confirmed economic growth remained solid in the second quarter. But analysts have scrapped their forecasts that the ECB will raise interest rates in September, due to turmoil in global financial markets.
"Trade data are not at the top of the ECB's list of factors when they decide on monetary policy and at the moment all eyes are on the weaker-than-expected ZEW (economic sentiment indicator) from Germany this morning as the financial market woes have weighed on investor confidence," said Jodie Tiller, analyst at CIBC World Markets.
The Eurostat data showed that eurozone exports to the United States eased by 2 percent in the January-May period and the trade surplus fell to 24.6 billion euros from 28.4 billion a year before.
With Japan, eurozone imports grew by 3 percent in the January-May period while exports were flat. The trade deficit with Japan widened to 10.2 billion euros from 9.6 billion. France, the most vocal critic of the euro's strength, saw its exports fall 0.5 percent on a seasonally adjusted basis in June, with imports down 3.0 percent.
Germany was the biggest contributor to the overall eurozone surplus, with a 7.3 billion euro positive balance. Eurostat said the euro zone's deficit in energy trade fell to 89 billion euros in January-May on a non-seasonally adjusted basis, compared with 105.3 billion in the same period last year. Its surplus in manufactured goods increased to 98.2 billion euros over the period from 88.8 billion.