The seasonally adjusted trade deficit narrowed in May. At €8.42 billion, the shortfall was down from April's larger revised €10.56 billion and the smallest since January 2022. It was also well below the €13.26 billion posted a year ago.

The monthly improvement reflected a 4.7 percent jump in exports that easily eclipsed a 0.4 percent rise in imports. On the year, exports are now up 7.7 percent while imports are down 1.1 percent. The trend in the deficit is moving in the right direction but any return to surplus is a very long way off.

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.