FR: Merchandise Trade

Fri Jan 06 01:45:00 CST 2017

Actual Previous Revised
Level E-4.38B E-5.20B E-5.15B

The seasonally adjusted trade deficit narrowed from E5.15 billion in October to E4.38 billion in November. This was the smallest shortfall since August but still points to a gradually deteriorating trend.

November's improvement reflected a 5.3 percent monthly bounce in exports, their first rise since August, to a near-record high of E38.811 billion. This was only partially offset by a 2.8 percent gain in imports. The recovery in the former was dominated by transport equipment, particularly aeronautics, and intermediate goods. What was the second successive advance in imports was more broad-based.

Having seen overall net exports hit quarterly economic growth in October-December by fully 0.6 percentage points, November's decline in the red ink on merchandise trade alone will come as a relief. Even so, the average shortfall in the first two months of the quarter was still 9 percent above the third quarter mean. Without a further marked improvement in December total net foreign trade is unlikely to have provided any significant support to real GDP growth last quarter.

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 and can offer a guide to an economy's competitiveness.

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.