Euro area exports to US and UK still significantly lower year-to-date in July
The single currency bloc's surplus on trade with the rest of the world widened in July, nearly completing a V-shaped recovery to pre-Covid levels.
In volume terms however, as opposed to the value of foreign trade which also account for changes in prices, trade remained below its pre-pandemic levels and the details of the report revealed a substantial to exports to the US and UK, Claus Vistesen at Pantheon Macroeconomics said.
According to Eurostat, in seasonally adjusted terms the surplus on trade in goods and services increased from €16.0bn for June to €20.3bn in July (consensus: €19.3bn).
June's surplus had initially been estimated at €17.1bn.
Euro area exports jumped by 5.7% month-on-month to reach €174.2bn, versus a 3.6% increase in purchases from overseas to €153.9bn.
"This is a strong result, but the details matter. The combined value of imports and exports is still just over 12% below its pre-crisis level, reflecting the fact that overall economic activity is still a good deal off its pre-virus level," Vistesen explained.
Furthermore, exports to the US and UK were down by 10% and 21% year-to-date, Vistesen added, while those to the People's Republic of China were only 2% lower.
Regarding the impact of the euro's appreciation, Vistesen said the impact thus far was "marginal" although a rise in Euro/dollar to 1.25 by end-2020 "would be more meaningful".
"But the relationship between the exchange rate and headline trade data operates with long, and variable lags, and is difficult to pin down."