FR: Merchandise Trade

Tue Dec 08 01:45:00 CST 2015

Actual Previous Revised
Level E-4.6B E-3.4B E-3.6B

The seasonally adjusted trade balance was in a E4.6 billion deficit in October, up sharply from a larger revised E3.6 billion shortfall in September and matching its worst performance since September 2014.

The headline deterioration was mainly due to a 2.3 percent monthly bounce in imports, although exports also dipped 0.1 percent. The rise in the former was quite broad-based with most areas of manufacturing seeing solid gains.

The October red ink was some 35 percent above the average for the third quarter when total net exports subtracted a sizeable 0.7 percentage points from quarterly real GDP growth. The poor start warns that an expected rebound in the current period may be limited, in turn dampening the chances of a pick-up in economic momentum. Of note, earlier this morning the national central bank shaded lower its forecast for fourth quarter GDP growth from 0.4 percent to 0.3 percent.

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.