Euro zone swings to trade surplus in March

The euro zone unexpectedly swung to a trade surplus in March from a month earlier, first official estimates showed today.

The euro zone unexpectedly swung to a trade surplus in March from a month earlier, first official estimates showed today.

Eurostat said the surplus came to €1.2 billion without seasonal adjustment, compared with a 3.1 billion deficit in February and beating economists' consensus forecasts of a €3.1 billion shortfall.

A year earlier, the 12-nation currency area logged a trade surplus of €4.0 billion.

"Healthy export growth has played a key role in the euro zone economy's improvement since mid-2005, so it is particularly encouraging to see that euro zone exports rose by a seasonally adjusted 1.2 per cent month-on-month in March," said Howard Archer, economist at Global Insight.

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Seasonally adjusted data showed a trade surplus of €0.3 billion in March, reversing a deficit of €2.8 billion in the previous month as exports increased by 1.2 per cent month-on-month and imports fell 1.5 per cent.

A detailed breakdown for March was not available, but February non-seasonally adjusted data showed the deficit in energy trade growing to €41.9 billion in the first two months of 2006 from €26.5 billion in the same period of 2005.

Imports from energy exporters Russia and Norway jumped 48 per cent in both cases, with exports to those countries rising only 25 and 17 per cent.

The euro zone's biggest trade deficit of €14.9 billion was with China in February, up from €10.9 billion a year earlier.

The surplus in manufactured goods inched up to €30.2 billion in January-February from €29.4 billion in the like period of 2005, but analysts cautioned about excessive optimism for the rest of the year, citing a recent appreciation in the euro.

Eurostat recently estimated that euro zone growth doubled to 0.6 per cent in the first quarter from the last three months of 2005, cementing expectations that the European Central Bank will raise its main rate by 0.25 point from 2.5 per cent in June.

The executive European Commission this month raised its euro zone growth forecast to 2.1 per cent in 2006 from 1.9 per cent, citing robust investment and exports, notably in Germany, supported by expected global growth of 4.6 per cent this year.