FR: Merchandise Trade

April 7, 2017 01:45 CDT

Actual Previous Revised
Level E-6.57B E-7.94B E-8.06B

The seasonally adjusted trade balance returned another sizeable E6.57 billion shortfall in February, down from E8.06 billion in January but still the second largest deficit in four years.

Exports were up 1.6 percent on the month thanks to gains in aerospace, pharmaceuticals, chemicals and electrical equipment. However, this reversed only a small part of January's 7.6 percent nosedive and sales overseas were 0.3 percent below their level a year ago. At the same time, imports were down 2.0 percent versus January, their first decline since last September but a small enough drop to leave their second highest level on record.

The disappointing February data put the average trade gap so far last quarter at 7.32 billion, a 60 percent increase versus the E4.56 billion mean posted in the final quarter of 2016. Total net exports boosted fourth quarter real GDP growth by just 0.1 percentage points but on current trends, probably had a much more significant negative impact in January-March.

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.