FR: Merchandise Trade

November 8, 2016 01:45 CST

Actual Previous Revised
Level E-4.77B E-4.26B E-4.19B

The seasonally adjusted trade balance was E4.77 billion in the red in September, up significantly from a marginally downwardly revised E4.19 billion shortfall in August and a 5-month high.

Both sides of the balance sheet shrank with exports tumbling 2.2 percent on the month and imports off a smaller 0.6 percent. Weaker autos, chemicals and pharmaceuticals undermined the former to leave sales overseas 0.9 percent short of their mark a year ago. Annual import growth was 1.8 percent.

The September report makes for a E13.11 billion third quarter deficit, a near-21 percent deterioration versus the previous period's E10.85 billion. Total net exports hit quarterly economic growth by fully 0.5 percentage points in the preliminary GDP report and, on current trends, look unlikely to provide much support in the current period.

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.