Stella Wang, Research Analyst at Nomura, notes that the real extra-euro area goods exports declined in November 2015 by 0.2% y-o-y (3mma, from -0.1% in October), registering the first consecutive monthly contraction since 2010. Key Quotes “Our export leading indicator, which incorporates variables such as PMIs of emerging markets and Japan, and US manufacturing ISM and German factory orders, points to a continued decline in the annual growth rate of (extra-euro area) goods exports as low as -3% y-o-y over the coming months. This is consistent with an ongoing drag from China, which accounts for 7% of the region’s exports and reported a 14.4% y-o-y decline in January nominal imports. Despite this weakness, the overall exports outlook is supported by robust intra-euro area trade that is around 45% of the total. Furthermore, our leading indicator suggests extra-euro area exports may stabilise in Q2 this year, reflecting a slower decline in German factory orders (non-euro area) and stabilisation in EM economies. Finally, the weakness may partly reflect an ongoing structural change in world trade. On balance, the recent weakness in our leading indicator is consistent with our below-consensus GDP forecast. We will monitor the indicator closely to see if more significant drags materialise.” For more information, read our latest forex news.