CH: Merchandise Trade Balance


Tue Jul 21 01:00:00 CDT 2015

Actual Previous Revised
Trade Balance level CHf3.58B CHf3.43B CHf3.41B

Highlights
The merchandise trade balance was in a CHF3.58 billion surplus in June following a marginally smaller revised CHF3.41 billion excess in April.

The minor increase in the black ink reflected a 5.9 percent annual rise in nominal exports and a 2.6 percent drop in imports. However, the gain in the former was wholly attributable to an 8.8 percent advance in volumes as prices fell 2.7 percent in respect of the ongoing strength of the CHF.

The June data made for a second quarter surplus of CHF17.68 billion, up from CHF15.99 billion in January-March. Seasonally adjusted exports contracted 2.4 percent over the period despite a 0.5 percent increase in volumes. A 5.8 percent drop in imports was led by a 3.7 percent decline in real purchases although CHF strength also contributed to a 5.8 percent slide in prices. Nominal exports have now weakened for two consecutive quarters and imports for three.

Today's figures underline how exporters have to cut margins in order to support business. At the same time, the weakness of imports highlights the sluggishness of Swiss domestic demand. For the SNB as well as local industry, a depreciation of the Swiss franc cannot come fast enough.

Definition
Merchandise trade measures the difference between the total value of Swiss exports and imports. Due to its small population and limited resources, foreign trade is very important for the Swiss economy and trade statistics can have a significant impact on markets. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. The focus is on the balance of trade in goods, excluding precious metals, gemstones, works of art and antiques. This is provided in unadjusted and workday adjusted measures for cash and volume. Seasonally adjusted monthly figures are not released so comparisons are usually made with reference to the year ago data.

Description
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 Swiss franc in the foreign exchange market. Switzerland's major trading partners include Germany, France, Italy and the United States. While Switzerland still exports large amounts of traditional products such as chocolate and watches, more than half of Swiss exports are in mechanical and electrical engineering and chemicals today. A positive trade balance indicates a trade surplus while a negative balance represents a trade deficit. Trade surpluses indicate that foreigners are buying more Swiss goods, which are typically paid for in Swiss Francs. This translates into greater demand for the currency and upward pressure on the value of the Franc. However, if the balance is a deficit, Swiss consumers are buying goods from trading partners which translates into higher demand for foreign currencies placing downward pressure on the value of the Franc.