FR: Merchandise Trade

Tue Jan 09 01:45:00 CST 2018

Actual Previous Revised
Level E-5.69B E-4.96B E-5.29B

The seasonally adjusted deficit weighed in at E5.69 billion in November, up from a revised E5.29 billion in October and the largest shortfall since February.

The headline deterioration was attributable to a 1.6 percent monthly fall in exports, their second consecutive decline. Weakness was most apparent in pharmaceuticals and chemicals as well as transport equipment. This more than offset a 0.5 percent decrease in imports, their first drop since August. The fall in the latter would have been steeper but for the rising cost of energy.

The latest figures imply an 11.7 percent widening in the average October/November deficit versus its third quarter mean. Some of this will reflect changes in relative prices, notably energy, but the magnitude of the red ink will 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.