Australia just recorded a monster trade surplus of over $3 billion

Dave Kotinsky/Getty Images for Metlife
  • Australia’s trade surplus surged to over $3 billion in September, well above the $1.8 billion level expected.
  • Booming growth in the value of iron ore and LNG exports, along with a drop in the value of machinery and industrial equipment and civil aircraft imports, largely explains the widening in the surplus.
  • Despite running big trade surpluses over the quarter, trade is unlikely to make any significant impact on Q3 GDP.

Australia’s trade surplus rocketed higher in September, lifting to a mammoth $3.017 billion in seasonally adjusted terms.

It was the largest surplus since February 2017, and the third-largest on record. The result easily breezed past expectations for smaller surplus of $1.8 billion.

August’s surplus, originally reported at $1.604 billion, was revised up to $2.342 billion.

According to the Australian Bureau of Statistics (ABS), exports rose by 1% in seasonally adjusted terms to $37.496 billion, the highest level ever recorded.

Non-rural goods exports — the largest component by dollar value — jumped by $678 million from a month earlier.

Exports of Metal ores and minerals, largely iron ore, surged by $551 million from a month earlier, reflecting recent strength in prices.

The value of LNG exports also rose by $270 million, the highest level on record. As more LNG facilities come online, there’s likely to be a few more records set in the period ahead, especially if global crude prices remain elevated.

Partially offsetting the strength in those major commodity exports, coal exports went in the other direction, dipping by $141 million from a month earlier as volumes fell.

Increases of $33 million and $96 million respectively were also recorded for rural goods and services exports compared to the levels reported in August.

The latter category was helped by a $97 million lift in the value of tourism-related exports.

The value of non-monetary gold exports — a volatile component that tends to jump around from month to month — slumped by $525 million from a month earlier. Without that usually large decline, the dollar value of exports would have been significantly larger.


On the other side of the trade ledger, imports fell by 1% to $34.479 billion, driven down by a significant decline in the value of capital goods which fell by $607 million, impacted by weaker imports of machinery and industrial equipment and civil aircraft.

Non-monetary gold imports also declined by $59 million.

Those declines were partially offset by increases of $210 million, $53 million and $11 million respectively in the value of imports of intermediate and other merchandise goods, consumption goods and services.

The increase in the value of intermediate and other merchandise goods largely reflected a $273 million surge in fuel imports.

Despite the surprise surge in the size of Australia’s surplus in September, and subsequent revisions to prior data, Paul Dales of Capital Economics said the result will do little to boost Australian Q3 GDP.

“Even though the trade surplus jumped from an upward-revised $2.3 billion in August to $3 billion in September, we estimate that net trade lowered Q3 GDP growth by 0.1 percentage points,” he says.

Real GDP is measured in volumes, rather than prices and volumes which is captured in nominal GDP readings.

Andrew Hanlan, Senior Economist at Westpac Bank, offered a similar opinion, although he thinks net exports likely added marginally to real GDP growth during the quarter.

“Net exports are likely to be a very small positive in the quarter, adding in the order of 0.1 percentage points to GDP growth based on our initial calculations,” he said. “It appears that import volumes dipped modestly in the quarter, while exports fared a little better.”

Instead of booming export volumes, Hanlan says much of the improvement on the export side of the ledger reflected stronger prices.

“Based on our preliminary calculations, we assess that the improved trade position was due almost entirely to a lift in the terms of trade, up by a little more than 1% on higher commodity prices, including for coal and iron ore.”

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