Australia’s trade deficit ballooned in February according to latest figures released by the Australian Bureau of Statistics (ABS).
The national trade deficit rose to $3.41 billion in February after seasonal adjustments, above the upwardly-revised $3.156 billion figure of January and expectations for a decline to $2.5 billion.
Putting the scale of the miss into perspective, the deficit was larger than any forecast offered by 21 economists polled by Bloomberg.
A small drop in the value of exports, along with an unchanged reading for imports, led to the larger-than-expected reading.
According to the ABS, goods and services exports fell by 1% to $25.265 billion.
The Bureau reports exports of non-monetary gold fell by $290 million, outpacing a decline of $200 million for rural exports. The value of services exports also declined, falling $50 million, or 1%.
Partially offsetting those falls, the value of non-rural exports rose by $232 million, thanks largely to a hefty $386 million increase in the value of metal ore and minerals exports. Exports of coal, coke and briquettes fell by $213 million.
On the other side of the ledger, goods and services imports were largely unchanged, dropping $54 million to $28.675 billion.
Imports of intermediate and other merchandise goods fell by $269m, offsetting a $272 million increase in consumption goods imports. Services exports also weakened, falling by $102 million.
Here’s a chart that looks at the recent trend in the trade balance, along with the value of goods and services imports and exports.
Michael Workman, senior economist at the CBA, believes the series of large trade deficits — revised higher by the ABS in February — will likely continue in the coming quarters unless commodity prices rise.
“February’s trade deficit indicates that there is little possibility of an improvement in the monthly trade deficits in coming quarters unless bulk commodity prices rise,” says Workman. “While export volumes have risen considerably, it has been offset by large price falls.”
He also suggests the deficits will continue to weigh on the Australian dollar should they persist.
“In our view, the trade and current account deficit outcomes are an important negative for the Australian dollar outlook against the USD and other major currencies,” he says. “The current account deficit is running near the 5% of GDP level, with no sign of improvement in the near term. It is driven mainly by the large trade deficits.”
The Australian dollar has fallen in the wake of the data, with the AUD/USD trading at .7576, a decline of 0.34%.