The euro area's external trade balance showed renewed strength in February 2025, recording a surplus of €21.0 billionup from a revised €14.4 billion the previous month. This sharp month-over-month rise signals a rebound in export performance, particularly in the chemicals sector, which substantially increased its surplus from €19.2 billion to €30.3 billion.

Exports to non-euro area countries rose by 6.2 percent year-over-year to €248.7 billion, outpacing import growth of 5.7 percent (€224.7 billion). However, some export-heavy sectors, such as machineries & vehicles and other manufactured goods, saw modest slowdowns compared to February 2024, indicating selective demand pressures in global markets.

Despite February's strength, the cumulative trade surplus for JanuaryFebruary 2025 fell to €24.8 billion, down from €32.3 billion in the same period last year. This reflects the slightly faster pace of import growth (6.6 percent) relative to exports (4.5 percent), suggesting an increase in external demand and rising input and consumption costs.

Intra-euro area trade remained stable, increasing marginally by 0.2 percent, hinting at subdued domestic integration. In essence, February's report highlights the euro area's ongoing export competitiveness amid sectoral shifts and global trade rebalancing.

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.