FR: Merchandise Trade

Fri Mar 06 01:45:00 CST 2015

Actual Previous Revised
Level E-3.7B E-3.4B E-3.3B

The seasonally adjusted merchandise trade balance returned a E3.7 billion deficit in January, up from a marginally smaller revised E3.3 billion shortfall in December.

The increase in the red ink wholly reflected a 2.5 percent monthly drop in exports, their first decline in six months, as imports also fell 1.3 percent. Exports were hit by lower Airbus deliveries following the record high set in December and were further depressed by softer overseas purchases of chemicals and pharmaceuticals. Compared with a year ago, exports were up 1.3 percent while imports were down 3.1 percent.

January's trade deficit was the largest since October and exceeded the fourth quarter's E3.5 billion average. Total net exports added a tick to the quarterly change in total output in October-December and the French authorities will be hoping for a more significant contribution over coming quarters.

Merchandise trade balance measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade. In France the main focus is the balance on trade in goods.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets. Given the size of the French economy, the euro can be sensitive to changes in the trade balance. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.