CH: Merchandise Trade Balance

Thu Oct 19 01:00:00 CDT 2017

Actual Previous Revised
Trade Balance level CHf2.92B CHf2.17B CHf2.20B

The trade balance was CHF2.92 billion in surplus in September following a slightly larger revised CHF2.20 billion in August.

The headline improvement reflected a fall in annual import growth from 10.7 percent to 9.5 percent and masked a deceleration in exports from a 4.7 percent to a 0.0 percent rate. Volumes followed suit with the yearly export rate off nearly 7 percentage points at minus 0.5 percent and imports slowing by 3.4 percentage points to 1.4 percent. The September data made for third quarter black ink of CHF8.5 billion, little changed from the second quarter but CHF1.8 billion short of the outturn a year ago.

However, seasonally adjusted the picture was much brighter with exports up a monthly 1.4 percent (volumes 3.4 percent) and imports 1.8 percent lower (minus 3.2 percent).

The third quarter saw a reduced pace of expansion in both sides of the balance sheet. Nonetheless, looking ahead, exports should benefit from the slide in the CHF which, at currently EUR/CHF1.154, is trading close to its weakest level versus the EUR since January 2015 when the SNB abandoned its FX target floor.

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.