CH: Merchandise Trade Balance

Thu Sep 21 01:00:00 CDT 2017

Actual Previous Revised
Trade Balance level CHf2.17B CHf3.51B CHf3.49B

The trade balance was in a CHF2.17 billion surplus in August after a marginally smaller revised CHF3.49 billion in July.

The decline reflected a 3.9 percent yearly increase in exports, down from 4.7 percent in July, and a rebound in imports from a minus 0.1 percent rate to 9.9 percent. Weak prices helped to restrict the former and annual growth of volumes climbed from 0.8 percent to 6.1 percent. Inflation-adjusted imports were up 6.5 percent after a minus 0.6 percent rate last time.

Seasonally adjusted, nominal exports were 0.7 percent firmer on the month, their first increase since May, while volumes were up 2.8 percent having contracted a cumulative 2.9 percent in June/July. Nominal imports advanced 4.3 percent, exactly reversing July's decline, and were 3.0 percent stronger in real terms.

The August trade data leave intact a gradually declining trend in the surplus with imports expanding at a slightly faster pace than exports. However, the near-5 percent appreciation of the euro against the CHF over the last couple of months will bolster Swiss export competitiveness and should boost the black ink over the medium-term.

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.