FR: Merchandise Trade

Thu Dec 07 01:45:00 CST 2017

Actual Previous Revised
Level E-4.96B E-4.67B E-4.64B

The seasonally adjusted trade balance was E4.96 billion in the red in October, up from a marginally smaller revised E4.64 billion in September and a 3-month high.

The headline deterioration reflected a 0.4 percent monthly rise in exports that was more than offset by a 1.1 percent increase in imports; the advance in the latter being largely attributable to a jump in purchases of pharmaceuticals. Annual export growth now stands at 10.1 percent while imports are up 8.0 percent on the year.

Total net exports subtracted a sizeable 0.6 percentage points off quarterly GDP growth in July-September. Today's data are hardly good news but should still equate with a much less negative, if not positive, contribution this quarter. Even so, the persistently high levels of red ink continue to question the competitiveness of French industry.

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.