EMU: Merchandise Trade

Tue May 19 04:00:00 CDT 2015

Actual Previous Revised
Level E19.7B E22.0B E22.6B
Imports-M/M 3.9% 2.6%
Imports-Y/Y 0.0% -3.0%
Exports-M/M 1.7% 2.8%
Exports-Y/Y 5.0% 2.0%

The seasonally adjusted trade balance was in a E19.7 billion surplus in March, a E2.9 billion fall versus its slightly larger revised February outturn. The unadjusted black ink was E23.4 billion, a marked improvement versus the previous month's E16.1 billion print.

The modest deterioration in the adjusted headline reflected a 1.7 percent monthly rise in exports that was more than eclipsed by a 3.9 percent bounce in imports. Even so, compared with a year ago, exports were up 5.0 percent but imports were only flat.

The March data yield a first quarter surplus of E63.5 billion, just 0.5 percent above the fourth quarter outturn. Moreover, since nominal imports will have been biased down by sharply weaker oil prices the likelihood is that net exports, which boosted real GDP growth by 0.2 percentage points in October-December, were nothing like as supportive at the start of the year.

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. For the Eurozone, monthly data are available for trade in goods; service statistics are released as part of the overall quarterly current account report. The headline trade data are not adjusted for seasonal factors and so should be viewed in relation to the year ago month. Seasonally adjusted figures are also available for monthly comparisons.

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 the value of the local currency dollar in the foreign exchange market.

Imports indicate demand for foreign goods and services. Exports show the demand for Eurozone goods in countries overseas. The euro can be particularly sensitive to changes in the balance since a trade deficit/surplus can create greater/reduced demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of EMU 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.