CANBERRA: Australia’s trade balance has stayed in the red with a worse-than-expected deficit of $3.1 billion in August, following a revised deficit in July of $2.8 billion. Economists had expected a deficit of $2.4 billion in August. The Australian Bureau of Statistics said exports were flat, while imports rose one per cent.
The Australian dollar fell from close to 70.90 US cents to below 70.70 US cents on the news, but recovered all lost ground in the following two hours. JP Morgan analyst Tom Kennedy said that “temporary” factors had dragged the Australian trade deficit lower. “Details were better than the headline suggests, however, with coal and oil and gas exports reporting decent gains,” he said.
“The weakness in August was owing to an unexpected move lower in metal exports, with non – monetary gold down $316 million, while metals, minus gold, fell $210 million. “Excluding these categories, which are both volatile and prone to large monthly swings, the underlying trajectory of Australia’s trade data was fairly decent.”
Mr Kennedy said that the surprise in the data was with nominal exports, which fell 0.5 per cent. “We had expected a 1 per cent increase,” he said. “The composition of export growth was better than the headline suggests, however, with ores and minerals flat, while coal and oil and gas shipments both posted solid gains.”
Mr Kennedy said the import data “played to script”. “Consumption goods imports rose strongly…while an impressive move, the exchange rate has depreciated by a similar magnitude in the past year, suggesting this is nominal, rather than volume, phenomenon.” TD Securities analyst Annette Beacher described the trade deficit as an “awful” result with “silver linings”.
“Tourism continues to shine as the weaker Australian dollar and wealthier Chinese see more visitors,” she said. “The lower Australian dollar should keep encouraging export growth away from the sloganistic “iron ore to China” and towards more broad-based export growth. “Major trading partner dynamics have changed little with China merely back to matching Japan’s importance.”
Among exports, goods and services credits fell $130 million, non-monetary gold fell $316 million, while net exports of goods under merchanting remained steady at $36m million. Some export categories rose, including rural goods which was up $96 million, and non-rural goods, up $77 million. Services credits rose $13 million.
Most import categories rose, including goods and services debits, up $173 million; consumption goods, up $139 million; intermediate and other merchandise goods up $67 million; and non-monetary gold, up $26 million. Capital goods fell $30 million and services debits fell $29 million.
