Australia’s terms of trade have weakened by another 3.1%, according to September quarter numbers released by the Australian Bureau of Statistics.
Weak iron ore and coal spot prices dragged down exports.
Falling petroleum import prices helped to limit the damage from plunging export prices, says J.P. Morgan Australia.
Australia’s terms of trade have now contracted for the past three quarters in a row, taking the cumulative decline for 2014 so far to almost 9%.
“Although we expect the terms of trade to continue to drift lower in the next few years, we expect the magnitude of these declines to moderate considerably, particular given the recent decline in oil prices and relative stability in iron ore spot markets,” says J.P. Morgan Australia says .
The catalyst for today’s decline was a near 4% fall in aggregate export prices in Australian dollar terms.
According to the ABS, falls included ores and metal scrap (-10.9%), coal, coke and briquettes (-5.2%), petroleum, petroleum products and related materials (-5.1%), and gold, non-monetary [excluding gold ores and concentrates] (-2.2%).
The falls were partly offset by rises in the prices received for gas, natural and manufactured (+4.7%), non-ferrous metals (+6.9%), and meat and meat preparations (+6.3%).