The merchandise trade surplus narrowed from October's marginally larger revised CHF4.71 billion to CHF3.71 billion in November. However, this was still up from the CHF2.16 billion posted in the same month in 2022. The improvement reflected a 3.3 percent yearly gain in exports and a 3.7 percent fall in imports. The latter has been sub-zero every month since February.

Seasonally adjusted, the surplus stood at CHF2.01 billion, well short of October's CHF3.41 billion and the weakest outturn since November 2022. The deterioration was largely due to imports which, having declined 4.9 percent on the month at the start of the quarter, rebounded fully 7.2 percent. By contrast, exports compounded October's 10.7 percent slump with a 0.5 percent dip. However, the real trade balance still improved as export volumes rose 1.8 percent on the back of a 7.8 percent bounce in chemicals and pharmaceuticals and their import counterpart increased 1.7 percent.

In its new Monetary Policy Assessment announced just last week the SNB warned that Swiss economic growth would be sluggish near-term, at least partly due to weak world growth. With local merchandise export volumes essentially flat so far this year, it may well be proved right.

The merchandise trade balance measures the difference between the total value of Swiss merchandise exports and imports. The focus is on the balance of trade in goods, excluding precious metals, gemstones, works of art and antiques. This is provided in unadjusted and seasonally adjusted measures for cash and volume.

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 Swiss franc in the foreign exchange market. Switzerland's major trading partners include Germany, France, Italy and the United States. While Switzerland still exports large amounts of traditional products such as chocolate and watches, more than half of Swiss exports are in mechanical and electrical engineering and chemicals today. A positive trade balance indicates a trade surplus while a negative balance represents a trade deficit. Trade surpluses indicate that foreigners are buying more Swiss goods, which are typically paid for in Swiss Francs. This translates into greater demand for the currency and upward pressure on the value of the Franc. However, if the balance is a deficit, Swiss consumers are buying goods from trading partners which translates into higher demand for foreign currencies placing downward pressure on the value of the Franc.