FR: Merchandise Trade

Fri Jul 07 01:45:00 CDT 2017

Actual Previous Revised
Level E-4.89B E-5.54B E-5.59B

The seasonally adjusted trade balance was in a E4.89 billion deficit in May. This was down from a minimally larger revised E5.59 billion in April and the least red ink since last December.

The reduction in the shortfall was attributable to exports which rose 4.3 percent on the month to a near record high. This easily more than reversed April's 2.2 percent decline and in no small way reflected the sale of the Meraviglia cruise ship alongside increased demand for other transport equipment. Imports were up 2.2 percent, supported by strength in intermediates and selected consumer goods.

The May outturn puts the average deficit so far last quarter nearly 20 percent below its first quarter mean. This should equate with a much better period for total net exports which subtracted a sizeable 0.6 percentage points from quarterly economic growth at the start of the year.

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.