CH: Merchandise Trade Balance

December 20, 2016 01:00 CST

Actual Previous Revised
Trade Balance level CHf3.64B CHf2.68B CHf2.66B

The trade balance was in the black to the tune of CHF3.64 billion in November, up from a marginally smaller revised CHF2.66 billion in October.

The headline improvement reflected a 2.1 percent yearly fall in exports that was more than eclipsed by a 4.9 percent slump in imports. In real terms, the picture was little different with exports off 3.7 percent and imports down a hefty 6.1 percent.

Seasonally adjusted, nominal exports dipped 0.4 percent on the month after a 6.7 percent nosedive in October while imports fell a much sharper 4.2 percent following a 2.6 percent advance last time.

What had been a rising trend in both sides of the balance sheet over the first half of 2016 has been replaced by a steady decline. At least the stronger real trade position bodes well for the external contribution to economic growth last month but this only followed a marked deterioration in October. There is nothing in today's report to make the SNB any less concerned about prospective CHF appreciation and official efforts to prevent just that will remain as resolute as ever.

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.