CH: Merchandise Trade Balance

September 20, 2016 01:00 CDT

Actual Previous Revised
Trade Balance level CHf3.03B CHf2.93B CHf2.81B

The August trade surplus widened out from a slightly smaller revised CHF2.81 billion in July to CHF3.03 billion, its smallest outturn since April.

Adjusted for differences in working days, exports were up 7.0 percent on the year after a 7.4 percent rise in July while imports gained 8.4 percent, down from 12.1 percent last time. However, the expansion in both sides of the balance sheet was strongly biased by higher prices and real exports were up just 1.2 percent, less than half the July rate, while import volumes advanced 5.1 percent, down from 8.5 percent.

Moreover, seasonally adjusted nominal exports fell 0.8 percent versus July and were off a sharper 2.1 percent in real terms. For imports the comparable rates were minus 4.6 percent and minus 3.5 percent.

July's data bring into question what had been a gradually accelerating growth path in both (nominal) exports and imports. The trend in each is now little more than flat. Just last week the SNB updated its economic projections to reveal a still only sluggish and unbalanced recovery in real GDP. Today's report on external developments is unlikely to impact that view.

The merchandise trade balance measures the difference between the total value of Swiss merchandise exports and imports. 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 changes are also available for total exports and imports.

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.