Australia recorded a monster trade surplus in May, helped by an enormous bounce in exports as supply disruptions to Queensland’s coal industry in April eased.
According to the ABS, the nation’s trade surplus ballooned to $2.471 billion in seasonally adjusted terms, nearly three-times higher than the median economist forecast of $1 billion.
April’s trade surplus, originally reported at $555 million, was revised sharply lower to just $90 million.
After plunging in April, exports rebounded strongly, jumping by 9% to $32.781 billion.
The ABS said that value of non-rural exports surged by $2.333 billion alone, an increase of 13%.
Indicating that the impact of Cyclone Debbie on Queensland’s coal industry was short lived, the ABS said that exports of coal, coke and briquettes jumped by $1.961 billion, or 62%.
In original terms, exports of hard coking and semi-soft coal rebounded by 180% and 58% respectively.
Exports of other mineral fuels, which include LNG, also surged, lifting by $923 million, an increase of 39%. That was due to a 29% lift in volumes, offsetting a 5% decline in prices. At $3.286 billion, the monthly total was the largest on record.
“There had been some outages in the LNG sector over the turn into Q2, so that recovery has also clearly helped the May data,” said Ben Jarman, economist at JP Morgan.
“The effect of growing capacity in LNG on the trade balance is starting to become more evident now. Having historically been more a function of oil prices, revenues are now jumping on volumes growth.”
Those increases were partially offset by a drop in the value of metal ores and minerals exports (iron ore) of $563 million over the same period. The ABS said that volumes of iron ore fines and lump rose by 3 and 5% respectively, offset by larger declines in prices.
Elsewhere the value of rural goods, non-monetary gold and services exports increased by $118 million, $42 million and $84 million respectively.
On the other side of the ledger, imports rose by a smaller 1%, or $197 million, to $30.31 billion.
The ABS said that imports of intermediate and other merchandise goods, consumption goods and services rose by $436 million, $119 million and $29 million respectively, offsetting declines of $285 million and $102 million for imports of capital goods and non-monetary gold.
This table from the ABS shows the individual breakdown by component of the May trade report.
While much of the volatility in recent trade reports has been due to one-off weather events, Jarman of JP Morgan says the trade balance will continue to be buffeted by multiple forces over the next couple of years.
“The choppy unwind of earlier commodity price gains is ongoing, making the terms of trade a drag in coming reports, while the increase in iron ore inventories in China is also a concern on the demand front,” he says.
“LNG output, in contrast, is scheduled to skyrocket as projects are finished and contract delivery is finalised.”
Despite the bounce in commodity exports recorded in May, economists at ANZ said that net exports will still likely detract from economic growth in the June quarter.
“Australia’s trade balance is still down from its average in Q1,” it said. “This suggests another negative contribution from net exports in Q2.”