CH: Merchandise Trade Balance

Tue Dec 22 01:00:00 CST 2015

Actual Previous Revised
Trade Balance level CHf3.14B CHf4.16B CHf4.09B

The trade surplus narrowed from a slightly smaller revised CHF4.09 billion in October to CHF3.14 billion in November. However, over the first eleven months of 2015 the cumulative surplus stood at some CHF34.16 billion, a rise of CHF5.86 billion versus the same period in 2014.

November's decline in the black ink reflected a 3.0 percent annual drop in nominal exports and a 1.4 percent increase in imports. In real terms, exports were up 0.5 percent while imports were 4.0 percent stronger.

Seasonally adjusted, exports shrank a monthly 2.8 percent in nominal terms, their first contraction since August, and were down 2.1 percent at constant prices after a 6.2 percent bounce in October. Cash imports were 2.1 percent higher than at the start of the quarter and volumes were up 0.2 percent after a 4.0 percent jump last time.

Since the start of the year seasonally adjusted export volumes have fallen in six months and expanded in five. Given the strength of the local currency this is not a bad performance but the SNB will certainly not want to see the CHF appreciate any further in 2016.

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.

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.