The seasonally adjusted merchandise trade balance improved from a larger revised €3.5 billion surplus in July to €11.9 billion in August. This is easily its best performance so far in 2023 and reflected a 1.6 percent monthly increase in exports, compounded by a 2.0 percent fall in imports. Unadjusted, the balance showed a €6.7 billion excess, up from a €54.4 billion deficit a year ago.

Despite the increase in exports, both sides of the balance sheet have contracted during the year. At €236.0 billion, exports are down only 0.4 percent versus last December but over the same period, imports have declined nearly 13 percent. Annual export growth in August was minus 3.9 percent while the import rate was minus 24.6 percent, largely on the back of the earlier fall in oil prices. Overall EU exports to Russia over the first seven months of 2023 slumped 30.0 percent versus the same period in 2022 while imports from Russia nosedived fully 76.6 percent.

Total net exports subtracted 0.4 percentage points from quarterly GDP growth in the second quarter but should have held up rather better in the period just ended.

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. For the Eurozone, monthly data are available for trade in goods; statistics on services are released as part of the overall quarterly current account report. The headline trade data are not adjusted for seasonal factors and so should only be viewed in relation to the outturn a year ago. However, seasonally adjusted figures available elsewhere in the report do allow for monthly comparisons.

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 the value of the local currency dollar in the foreign exchange market.

Imports indicate demand for foreign goods and services. Exports show the demand for Eurozone goods in countries overseas. The euro can be particularly sensitive to changes in the balance since a trade deficit/surplus can create greater/reduced demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of EMU 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.