EMU: Merchandise Trade

Wed Nov 15 04:00:00 CST 2017

Actual Previous Revised
Level E25.0B E21.6B E21.0B
Imports-M/M -1.2% 0.4% 0.9%
Imports-Y/Y 5.1% 8.6% 8.8%
Exports-M/M 1.1% 2.5% 2.4%
Exports-Y/Y 5.6% 6.8%

The seasonally adjusted trade balance was a record E25.0 billion in the black in September after a slightly smaller revised E21.0 billion in August. Unadjusted, the surplus stood at E26.4 billion, up from E24.3 billion a year ago.

The marked headline improvement reflected a combination of stronger exports and weaker imports. The former rose 1.2 percent on the month following a 2.4 percent gain in August while the latter dropped 1.2 percent after a 0.9 percent advance. Compared with September 2016, exports were 5.6 percent higher and imports 5.1 percent better off.

The September data make for a third quarter surplus of E64.2 billion, a near-9 percent increase versus the previous period when total net exports added just 0.1 percentage points to quarterly real GDP growth. Price effects will have been important last quarter but the signs are that net external trade again made a positive contribution to Eurozone economic growth.

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. For the Eurozone, monthly data are available for trade in goods; statistics on services are released as part of the overall quarterly current account report. The headline trade data are not adjusted for seasonal factors and so should only be viewed in relation to the outturn a year ago. However, seasonally adjusted figures available elsewhere in the report do allow for monthly comparisons.

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 local currency dollar in the foreign exchange market.

Imports indicate demand for foreign goods and services. Exports show the demand for Eurozone goods in countries overseas. The euro can be particularly sensitive to changes in the balance since a trade deficit/surplus can create greater/reduced demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of EMU 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.