FR: Merchandise Trade

August 5, 2016 01:45 CDT

Actual Previous Revised
Level E--3.44B E-2.84B E-2.72B

The seasonally adjusted merchandise trade balance was in a E3.44 billion deficit in June after a slightly smaller revised E2.72 billion shortfall in May.

The headline deterioration reflected a 1.8 percent monthly fall in exports, largely on the back of declines in transport equipment and pharmaceuticals only partially offset by stronger aircraft, autos and intermediate goods. Imports were just 0.1 percent higher despite a sharp drop in transport equipment and natural hydrocarbons.

June's shortfall puts the second quarter E10.98 billion in the red, an increase of 15.6 percent versus the first quarter. However, higher energy prices will have boosted nominal imports and the flash second quarter GDP data showed total net exports making a more than useful 0.3 percentage point contribution to real GDP growth. Even so, exports have been struggling for some time and in June were some 7.5 percent lower on the year. Doubts about the competitiveness of the French economy at current exchange rate levels are unlikely to go away.

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.