FR: Merchandise Trade

Thu May 07 01:45:00 CDT 2015

Actual Previous Revised
Level E-4.6B E-3.5B E-3.6B

The seasonally adjusted trade deficit widened out from a marginally larger revised E3.6 billion in February to E4.6 billion in March, the most red ink since August 2015.

March's marked deterioration reflected strong imports which, up 3.1 percent on the month, were close to their record high on the back of a sharp increase in energy purchases. Imports of autos, capital goods and intermediates were also firm. Exports increased a relatively sluggish 0.9 percent versus February and gains in autos, pharmaceuticals, metals and electronic equipment were partially offset by falls in aerospace deliveries. Compared with a year ago, imports were up 3.1 percent and exports 3.8 percent firmer.

March's setback means that the first quarter trade gap rose to 12.0 billion from E10.8 billion in October-December. Having seen the cost of oil fall dramatically, the worsening will disappoint French policymakers and will ensure that pressure on Germany to address its bulging trade surplus remains as intense as ever.

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.