The seasonally adjusted trade balance improved in January. At €12.94 billion, the deficit was down from December's slightly smaller revised €14.73 billion and a 3-month low. However, it was still some 49 percent larger than in January 2022.

In fact, the monthly fall in the red ink reflected a 2.2 percent drop in exports that was more than offset by a 4.5 percent decline in imports. Exports have now fallen for five consecutive months and, at €49.43 billion, now stand at their lowest level since last May. Imports (€62.36 billion) are similarly weaker than at any time since May 2022. The deficit on capital goods (€3.5 billion) hit a new record high but the shortfall on consumer goods (€0.7 billion) improved marginally.

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.