EMU: Merchandise Trade

Tue Aug 16 04:00:00 CDT 2016

Consensus Actual Previous Revised
Level E23.2B E23.4B E24.5B E24.6B
Imports-M/M 1.5% -1.5%
Imports-Y/Y -5.0% -2.0%
Exports-M/M 0.5% -1.9%
Exports-Y/Y -2.0% 2.0%

The seasonally adjusted trade balance was E23.4 billion in the black in June, down from an upwardly revised E24.6 billion in May and in line with expectations. Unadjusted the surplus stood at E29.2 billion versus E 25.5 billion a year ago.

The decline in the headline data reflected a 0.5 percent monthly rise in exports that was more than offset by a 1.5 percent increase in imports. Compared with June 2015, unadjusted exports show a decline of 2 percent while imports are down 5 percent.

For the first six months of 2016, exports of goods out of the euro area to the rest of the world fell 1 percent to E1,005.5 billion from a year ago, while imports fell 3 percent to E871.0 billion. As a result, the euro area trade surplus amounted to E134.5 billion during the period, up from E111 billion in the first six months of 2015.

In the first six months of 2016, the EU28 had the largest surplus with the United States, amounting to E56.8 billion, down from E58.3 billion in the same year ago period. Meanwhile the largest deficit for the first half of 2016, with China, stood nearly unchanged from a year ago at E83 billion.

The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade. For the Eurozone, monthly data are available for trade in goods; statistics on services are released as part of the overall quarterly current account report. The headline trade data are not adjusted for seasonal factors and so should only be viewed in relation to the outturn a year ago. However, seasonally adjusted figures available elsewhere in the report do allow for monthly comparisons.

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 local currency dollar in the foreign exchange market.

Imports indicate demand for foreign goods and services. Exports show the demand for Eurozone goods in countries overseas. The euro can be particularly sensitive to changes in the balance since a trade deficit/surplus can create greater/reduced demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of EMU 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.