FR: Merchandise Trade

June 8, 2017 01:45 CDT

Actual Previous Revised
Level E-5.54B E-5.35B E-4.78B

The seasonally adjusted trade balance was E5.54 billion in the red in April following a downwardly revised E4.78 billion in March.

The headline deterioration was wholly attributable to the weakness of exports which fell 3.1 percent on the month and so wiped out much of March's 4.4 percent bounce. Declines in aeronautics and industrial equipment were largely to blame. Imports were down 1.0 percent at E43.81 billion, a 3-month low.

April's shortfall was well below the first quarter average of E6.40 billion. This provides early reason for supposing that total net exports will not hit real GDP growth this quarter by anything like the 0.7 percentage points that they did at the start of the year. Even so, the trend in the trade balance remains poor and underlines the need for new President Emmanuel Macron to deliver on his business reform proposals as quickly as possible.

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.