The trade surplus for Europe's biggest economy leapt 12 percent higher and exports gained 2.3 percent from the previous month, federal statistics office figures showed. That was driven largely by a pick-up of Asian activity, experts said.
But industrial production fell by 0.9 percent from June output, provisional data released by the economy ministry added, following a revised increase of 0.8 percent that month.
A calender effect was responsible for the drop, a ministry statement said, while noting that a sub index for the construction sector also fell by 2.3 percent on the month.
Production of investment goods including machine tools and automobiles was 3.2 percent lower than in June, the data showed. Those figures demonstrated that "the recovery remains fairly fragile," Capital Economics economist Ben May commented.
German activity contracted from the second quarter of 2008 through the first three months of this year, but posted a surprise expansion of 0.3 percent in the second quarter of 2009. And although the output data was disappointing, "the economy still seems on track to expand modestly in the third quarter," May said.
Germany's trade surplus surged to €13.9 billion ($19.9 billion) from €12.4 billion in June, and confidence indicators, retail sales and industrial orders also point to an upturn in the second half of the year. Beyond that the outlook is more clouded however, as effects of government stimulus schemes such as a popular cash-for-clunkers car scrapping bonus taper off in 2010.
Rising unemployment "and a possible credit crunch are potential party poopers" as well, ING senior economist Carsten Brzeski noted.
But exports from Germany, a global leader, showed once again that a pick up in global activity benefited makers of machine tools and other capital goods, a sector in which small and mid-sized German companies are strong.
The value of German exports rose to €70.5 billion in July from €67.9 billion in June, while imports were essentially unchanged at €56.6 billion. Germany's current account balance of payments, the broadest measure of trade with other countries, showed a surplus of €11 billion in July according to provisional data provided by the central bank.
The country's export-led economic model has been criticised in the global economic downturn, but it is now poised to benefit from a turnaround. "It looks as if exports have again become a trump card. From burden to blessing within a couple of months," Brzeski said.
"The pick-up in economic activity in Asia is benefiting German exports," he noted, while adding that "for more sustainable growth, the economy will need to shift towards a better balance between domestic and foreign demand."
For all of 2009, the German government expects a contraction of 6.0 percent, though Chancellor Angela Merkel suggested last month that it could be revised to somewhere between "5.0 or 6.0 percent."