The June trade data is out and it’s a shocker.
The market had been forecasting the deficit to come in at a not insubstantial $2 billion for the month but the Australian Bureau of Statistics report showed a seasonally adjusted deficit of $3.195 billion.
That’s a blowout of $777 million on the previous month’s print of $2.418 billion.
Driving the increased deficit was a 1% fall in credits (exports) and a 2% fall in debits (imports).
Specifically, on the export side of the ledger which showed a $213 million fall in receipts, the data revealed the key drivers were non-monetary gold which fell 15% or $270 million, while rural goods rose $35 million, and non-rural goods rose $20 million.
Iron ore did its part, rising $95 million for the month, along with non-gold metals which rose $63 million. But this was offset by a 5% fall in coal, coke, and briquettes which saw the value of these exports drop $142 million.
In terms of imports, which rose $564 million in June, the ABS said the key drivers were a big lift in consumption goods which rose $588 million, 7%, in seasonally adjusted terms. Capital goods were also up a healthy $147 million for a 3% increase.
Healthy is a relative term. A trade deficit of more than $3 billion, and the persistence of large trade deficits recently, is something international investors will be watching closely as Australia’s current account deficit to GDP ratio remains high.
But big increases, at least in seasonally adjusted terms, for consumption and capital goods could be a sign that overall the Australian economy is in good health and the economic transition is indeed broadening.