| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Balance | €-8.0B | €-6.71B | €-8.42B | €-7.94B |
Highlights
The seasonally adjusted trade deficit narrowed from a downwardly revised €7.94 billion in May to €6.71 billion in June. This was the smallest shortfall since August 2021 and well below the market consensus.
However, the monthly improvement masked a 1.3 percent drop in exports that was more than offset by a 3.2 percent fall in imports. That said, over the quarter, exports climbed 2.3 percent while imports declined 0.9 percent. Annual growth of the former now stands at 6.3 percent and of the latter, at minus 3.8 percent, imports being hit by weaker energy prices.
The deficit in June was around 60 percent smaller than the €17.31 peak seen in August last year and the trend is clearly moving in the right direction even if there is still a long way to go. Indeed, overall net exports added fully 0.7 percentage points to second quarter GDP growth. Today's update puts the French ECDI at 21 and the ECDI-P at 38, both measures showing that economic activity in general is running a good deal faster than market expectations.
However, the monthly improvement masked a 1.3 percent drop in exports that was more than offset by a 3.2 percent fall in imports. That said, over the quarter, exports climbed 2.3 percent while imports declined 0.9 percent. Annual growth of the former now stands at 6.3 percent and of the latter, at minus 3.8 percent, imports being hit by weaker energy prices.
The deficit in June was around 60 percent smaller than the €17.31 peak seen in August last year and the trend is clearly moving in the right direction even if there is still a long way to go. Indeed, overall net exports added fully 0.7 percentage points to second quarter GDP growth. Today's update puts the French ECDI at 21 and the ECDI-P at 38, both measures showing that economic activity in general is running a good deal faster than market expectations.
Definition
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.
Description
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.
