FR: Merchandise Trade

Fri Oct 06 01:45:00 CDT 2017

Actual Previous Revised
Level E-4.51B E-5.97B E-5.85B

The seasonally adjusted trade deficit narrowed from a marginally smaller revised E5.85 billion in July to E4.51 billion in August, the least red ink since December 2016.

The headline improvement was due to a combination of stronger exports, which rose 1.4 percent on the month, and weaker imports, which fell 1.8 percent. The bounce in the former reflected strength in aeronautical and space shipments alongside better performances by both the agri-food and machinery sectors.

However, despite its narrowing in August, the average shortfall for July/August was still 4 percent up on the second quarter mean. This warns that total net exports last quarter are unlikely to come anywhere close to providing real GDP growth with another 0.6 percentage point boost as they did in April-June.

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.