CH: Merchandise Trade Balance

October 20, 2016 01:00 CDT

Actual Previous Revised
Trade Balance level CHf4.37B CHf3.03B CHf3.01B

The merchandise trade balance was in a E4.37 billion surplus in September, up from a marginally smaller revised E3.01 billion in August.

Unadjusted nominal exports were 10.4 percent higher on the year after a 7.2 percent increase in mid-quarter with volumes gaining a tidy 5.7 percent. Nominal imports saw annual growth of 3.8 percent although this masked a 0.1 percent decline in real terms. Seasonally adjusted exports climbed 4.1 percent on the month (volumes 4.3 percent) while imports fell 2.1 percent (volumes minus 3.3 percent). The September report puts the third quarter surplus at E10.2 billion, a E0.7 billion increase from a year ago. Seasonally adjusted real exports (2.6 percent) and real imports (2.5 percent) both recorded positive quarterly growth after declines in the previous period and so reinforce the rising trend already apparent in both sides of the balance sheet.

Overall the impression is that Swiss exporters continue to adjust quite well to the sharp appreciation of the Swiss franc since January 2015 but the SNB will be as wary as ever of any further currency gains. With signs that domestic demand is slowing and inflation still negative, the last thing the central bank wants now is a still stronger local unit.

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.