CH: Merchandise Trade Balance

Tue Nov 21 01:00:00 CST 2017

Actual Previous Revised
Trade Balance level CHf2.33B CHf2.92B CHf2.82B

The merchandise trade balance was in a CHF2.33 billion surplus in October after slightly smaller revised black ink of CHF2.82 billion in September.

The headline deterioration masked a sharp improvement in exports which picked up from a 0.5 percent annual expansion rate in September to 5.0 percent. Imports slowed from 10.8 percent to 7.0 percent but still posted the faster growth. However, the pattern of real trade flows was very different with export volume growth climbing from minus 0.6 percent to 2.3 percent and real imports slowing from 1.7 percent to minus 2.5 percent.

That said, seasonally adjusted, exports volumes were 1.8 percent lower on the month, their third contraction in the last four months. Real imports were 1.1 percent weaker having already fallen 1.1 percent in the previous period.

The October data leave a slightly weakening trend in exports and a broadly flat profile to imports. CHF weakness should help to bolster the real trade balance over coming quarters.

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.