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Last Updated: Friday, 8 December 2006, 13:34 GMT
German trade surplus hits record
Worker in a Volkswagen factory
German exporters are enjoying strong demand for their products
Germany's trade surplus unexpectedly grew to a record in October, underpinning optimism about the pace of recovery in Europe's largest economy.

The surplus was 17.2bn euros (12bn; $23bn) in October, driven by exports destined for outside the EU, the Federal Statistics Office said.

Analysts said that the strength of demand could carry through to 2007.

Germany's improving economic conditions were also reflected by a report showing a drop in corporate bankruptcies.

World leader

Matthias Rubisch, an analyst at Commerzbank, called the trade surplus figures "really astounding".

"After the strong rise in September, we hadn't expected such a strong number in October," he explained. "Given that the global economy and US growth cooling, it is astonishing to see a level like this."

Exports rose by 22.6% to 84.1bn euros in October, while imports gained 17.6% to 66.8bn.

Alexander Koch of Unicredit said October's strong figures meant that Germany was again the "export world champion for merchandise goods in 2006", topping the US for a fourth year in a row.

German companies are benefiting and the statistical office said that the number of corporate insolvencies fell 17.3% in September from a year earlier.

In the first nine months of this year, 23,391 companies went bust, down 17% from the same period in 2005.

'Warning signal'

There was a hiccup in Friday's economic data, however, after German industrial production fell unexpectedly in October.

According to the Economy Ministry, output fell by 1.4% in October from the previous month, a figure that may signal a slowing of sales.

"We should see a strong increase in the coming month," said Dirk Schumacher, an economist at Goldman Sachs. "If we don't, then it could be a warning signal."

The Economy Ministry said that output was "taking a breather" after strong growth in previous months.

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