Australia’s trade deficit narrowed sharply in September, declining to $2.317 billion. The figure, smaller than the downwardly revised $2.711 billion deficit of August, beat expectations for an increase to $3 billion.
Over the month exports increased 3% to $27.428 billion.
The ABS reported that non-rural goods exports rose by $681 million, the largest increase of any category. A $478 million increase in metal ores and minerals exports, chiefly iron ore, was largely responsible for the increase. Elsewhere non-monetary gold increased by $135 million (10%) while rural goods ticked higher by $43 million. Services exports rose by a modest $42 million, or 1%.
On the other side of the ledger imports increased 2% to $27.745 billion.
Goods and services debits rose by $507 million to $29,745 million. Consumption goods imports increased by $264m while non-monetary gold and capital goods exports rose by $161 million and $115 million respectively. Intermediate and other merchandise imports fell by $138 million. Services imports rose by $106 million.
According to Kirk Zammit and Justin Fabo, economists at ANZ, the narrowing in the trade deficit will likely have a positive impact on Australian Q3 GDP.
“Australia’s trade deficit was much narrower than expected in September. Revisions and a sharp increase in gold exports explain most of the forecast miss. Net exports are expected to make a significant contribution to Q3 GDP growth,” they wrote in a note following the data’s release.
They also expect that the trade deficit will continue to narrow in the months ahead as Australia’s LNG exports ramp up.
“We expect the trade deficit to continue to slowly narrow over 2016 and 2017 for several reasons: the lower AUD; LNG exports will ramp up sharply; lower capital imports amid falling mining investment; and commodity prices are expected to be broadly stable.”
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