Australian international trade data for November has come in well under expectations, recording the largest deficit in over a year.
According to the Australian Bureau of Statistics (ABS), a deficit of $628 million was reported in seasonally adjusted terms, well below the $550 million surplus that had been expected by economists.
October’s trade surplus, initially reported at $105 million, was also revised lower to show a deficit of $302 million.
“In original terms, the revisions have resulted in a turnaround from a surplus on goods and services of $762 million to a deficit of $3 million for the four months to October 2017,” the ABS said.
It was the first time since October 2016 that back-to-back deficits have been reported.
The ABS said the value of exports rose by 0.4% to $31.853 billion in seasonally adjusted terms.
Exports of non-rural goods, rural goods and services all increased, lifting by $394 million, $25 million and $147 million respectively. However, despite those improvements, a sharp drop in volatile non-monetary gold exports of $425 million completely offset those gains.
For non-rural goods — the largest category in dollar terms — exports of metal ores and minerals (largely iron ore) rose by $76 million. Other mineral fuels exports (LNG) also increased, rising by $129 million over the month.
In contrast, exports of coal, coke and briquettes fell by $98 million over the same period, likely reflecting attempts from Chinese authorities to limit air pollution in northern provinces between mid-November to mid-March.
On the other side of the ledger, imports rose by 1.5% to $32.481 billion after seasonal adjustments, leaving them at the highest level on record.
Imports of consumption, capital goods, intermediate and other merchandise goods and services all increased, rising by $213 million, $190 million, $81 million and $83 million respectively.
Non-monetary gold imports was the only category to record a decline, falling by $100 million.
This table from the ABS shows the changes by category for exports and imports in seasonally adjusted terms.
While the headline deficit was unexpected, it was largely driven by an unusually large drop in non-monetary gold exports.
Looking through the remainder of the report, solid increases in Australia’s commodity and services exports, along with stronger consumer and capital goods imports, all points to improving demand both at home and abroad, fitting with the upswing currently underway across the global economy.
However, Kate Hickie, Economist at Capital Economics, says the back-to-back trade deficits increases the likelihood that net exports will detract from economic growth in the December quarter.
“Even if the trade balance did recover in December, the weak start to the quarter means that net trade probably made a negative contribution to GDP growth in the fourth quarter of last year following a neutral contribution in the third quarter,” she said following the release of the report.
“Part of the widening in the trade deficit in November, however, was probably reversed in December.”