- Australia’s trade balance swung back into the black in January, logging the largest surplus since September last year.
- Exports soared by 4%, leaving them at the highest point since late 2016.
- After detracting from GDP growth in the December quarter, the early indications appear positive on the outlook for next exports in Q1.
Australia’s international trade balance swung back to surplus in January, recovering following a large deficit in December.
According to the Australian Bureau of Statistics (ABS), a surplus of $1.055 billion was recorded during the month in seasonally adjusted terms, more than five times larger than the $200 million surplus that had been expected by economists.
It was the largest trade surplus since September 2017.
December’s trade deficit, originally reported at $1.358 billion, was also revised to show a deficit of $1.146 billion.
The ABS said the value of exports rose by 4%, or $1.394 billion, to $33.924 billion, helped by large gains in the value of Australian non-rural and non-monetary gold exports.
Non-rural exports increased by $869 million from a month earlier, up 4% from the level reported in December.
Of Australia’s major commodity exports, those of other liquid fuels, predominantly LNG, rose by $287 million, while those for iron ore and coal rose by a smaller $44 million and $1 million respectively.
Contributing to the usually large headline increase, the value of volatile non-monetary gold exports also jumped by $770 million, up a mammoth 54% from a month earlier.
Services exports also rose by $77 million, helping to offset a decline of $312 million for rural goods.
Combined, the value of exports was the largest since December 2016.
On the other side of the trade ledger, imports declined by 2%, or $807 million, to $32.869 billion, partially reversing a large increase in December.
All categories aside from services registered a decrease, led by consumption goods which fell by $586 million from a month earlier.
Declines of $90 million, $68 million and $95 million were also recorded for capital goods, intermediate and other merchandise goods and non-monetary gold.
Services imports bucked the trend, lifting by $31 million from a month earlier.
After a weak trade performance in late 2017, lopping 0.5 percentage points from Q4 GDP, Westpac’s economic team says today’s result is a promising sign that the same performance won’t be repeated in the March quarter.
“The quick return to trade surplus following a one-off deficit in December represents a positive start to the March quarter,” says Andrew Hanlan, Senior Economist at Westpac.
“This is a welcomed turnaround given that in the December quarter a temporary dip in export volumes, of 1.8%, subtracted a sizeable 0.4 percentage points from activity.”
Hanlan says Australia’s export performance is expected to improve this year, helped by robust global growth and additional capacity coming online in Australia’s LNG sector.
“The January outcome lends support to this view,” he says.