By Joseph Nasr
BERLIN (Reuters) - German trade activity picked up in August as exports outpaced imports, widening the surplus and adding to evidence that Europe's biggest economy performed strongly in the third quarter.
Seasonally adjusted exports rose by 3.1 percent on the month while imports were 1.2 percent up, data published on Tuesday showed.
It was the strongest export growth reading in 12 months, easing concerns that a stronger euro might dent sales of German goods and services abroad.
The figures suggest that the German economy, the euro zone's growth engine, is set for a solid expansion in the third quarter despite uncertainties about the make-up of the next government following national elections last month.
"While financial markets and the ECB have been discussing the risks of a stronger euro, the country which often claims to be export world champion is still enjoying a strong export recovery," Carsten Brzeski of ING Diba wrote in a note.
"Despite the summer lull, the year 2017 should be the best year for German exports since 2010."
Both hard economic data and sentiment surveys have pointed to strong German growth in the July-September period and a solid expansion for the whole of 2017.
'BEST OF ALL WORLDS'
Industrial output posted its biggest monthly rise in more than six years in August, while an index for export expectations by the Ifo economic institute rose in September as soaring demand for German goods made manufacturers more optimistic.
The German economy grew by 0.7 percent on the quarter between January and March and by 0.6 percent in the second quarter, driven by household and state spending as consumers reaped the benefits of record-low borrowing costs and a low unemployment rate.
The main risks to the German economy come from abroad, economists say.
"Geopolitical risks, a slowdown of the U.S. or UK economy and a deflating eu(ro)phoria could dent the strong growth momentum," said Brzeski. "However, for the time being, the German economy is enjoying the best of all worlds: strong domestic demand and surging exports."
Both export and import growth was stronger than expected. A Reuters poll had pointed to exports rising 1.0 percent and imports jumping by 0.5 percent.
The seasonally adjusted trade surplus widened to 21.6 billion euros ($25.4 billion) from a downwardly revised 19.3 billion euros in July. The August reading was higher than the Reuters consensus forecast of 20.0 billion euros.
Germany's wider current account surplus, which measures the flow of goods, services and investments, fell to 17.8 billion euros after an upwardly revised reading of 19.6 billion euros in July, unadjusted data showed.