CH: Merchandise Trade Balance

July 21, 2016 01:00 CDT

Actual Previous Revised
Trade Balance level CHf3.55B CHf3.79B CHf3.78B

The trade surplus weighed in at CHF3.55 billion in June, down just slightly from May's minimally smaller revised CHF3.78 billion. Both exports and imports were 1.5 percent higher than in the same month in 2015.

The June black ink made for a first half surplus of CHF19.3 billion after CHF19.1 billion in the previous period and CHF17.4 billion a year ago. Strength in chemicals and pharmaceuticals saw nominal exports rise an annual 4.7 percent while imports advanced 5.6 percent. However, their volume counterparts were notably weaker, decreasing 3.1 percent and increasing 1.0 percent respectively.

Seasonally adjusted, first half cash exports were 0.8 percent stronger than in the second half of last year but 1.0 percent weaker when expressed in volumes. The comparable import figures were 1.8 percent and minus 1.6 percent.

Both sides of the trade balance have shown solid nominal growth since bottoming in the third quarter of 2015, in large part reflecting rising sales to the U.S. market. However, the increase in exports has been achieved by via price cuts that cannot be good for profitability over the longer-term.

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.