FR: Merchandise Trade

Fri Nov 06 01:45:00 CST 2015

Consensus Actual Previous
Level E-3.1B E-3.4B E-3.0B

The seasonally adjusted merchandise trade balance returned a E3.4 billion deficit in September following an unrevised E3.0 billion shortfall in August.

The limited deterioration was attributable to a combination of weaker exports, which fell 0.6 percent on the month, and stronger imports, which were up 0.5 percent. Their third successive decline left exports 5.1 percent below their June high while imports, despite a partial rebound, were down 3.1 percent over the same period.

September's data put the third quarter red ink at E3.2 billion, essentially matching the second quarter outturn. This should be reflected in a much smaller contribution from net exports to real GDP growth than the 0.4 percentage point boost provided in April-June. In turn, the reduced support here argues against much of a pick-up in economic activity following its stagnation in the second quarter.

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.