CH: Merchandise Trade Balance

Tue Aug 22 01:00:00 CDT 2017

Actual Previous Revised
Trade Balance level CHf3.51B CHf2.81B CHf2.76B

The merchandise trade balance was in a CHF3.51 billion surplus in July, up from a marginally smaller revised CHF2.76 billion in June. Exports were 4.5 percent higher on the year in nominal terms while export volumes were 0.6 percent stronger. These figures compare with respective outturns of 6.5 percent in and 3.3 percent in June. Nominal imports fell 0.5 percent into the red versus July 2016 with volumes down by 0.9 percent.

Versus the prior month, the balance sheet contracted on both sides on a seasonally adjusted basis, with nominal exports declining 2.0 percent from their May level and nominal imports by 4.8 percent. In volume terms, exports were down 1.7 percent and imports down 1.0 percent.

July's surplus growth may be welcome but it unfortunately reflects a lopsided contraction of the balance sheet rather than strength, and July's decline in exports for the second time in as many months comes as somewhat of a disappointment after the dynamic showing in May.

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.