Australia's trade deficit was much better than expected

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Australia’s trade has printed a much better than expected deficit of $2.163 billion for March 2016.

That’s a fall of $881 million (29%) over February’s big deficit on the balance of goods and services.

AUDUSD 5 minute (MT4, AxiTrader)

That deficit also beat market expectations of another big print of $2.9 billion. That, and better than expected retail sales data, has helped the Aussie dollar continue the rally that began a little before 11am. That lifted the AUDUSD back toward 75 cents with a current price of 0.7485.

While the data is a big improvement on market expectations and last month, it is still the 24th month in a row that Australia has run a trade deficit.

That’s the bad news.

But the good news is that there were solid improvements in exports across the board – not just mining. The ABS said: “Goods and services credits rose $1,084m (4%) to $26,529m. Non-monetary gold rose $659m (58%) and non-rural goods rose $356m (2%).” Services exports were also higher by “$155m (3%)”.

On the import front, there was a rise, but only of $203 million to $28.692 billion, the ABS said.

The big movers the ABS called out were “non-monetary gold rose $122m (33%), capital goods rose $94m (2%) and intermediate and other merchandise goods rose $50m (1%). Consumption goods fell $177m (2%). Services debits rose $114m (2%).”

Looking specifically at mining, the data showed:

  • Iron ore lump, up $88m (10%), with unit values up 9%. Exports to China (excluding SARs and Taiwan) rose $73m (11%), with quantities up 2% and unit values up 9%.
  • Iron ore fines, up $608m (24%), with quantities up 9% and unit values up 13%. China (excluding SARs and Taiwan) rose $514m (24%), with quantities up 8% and unit values up 14%. Japan rose $65m (37%), with quantities up 30% and unit values up 5%.
  • Hard coking coal was also higher, rising 5%, semi-soft coal rose 45%, but thermal coal was 3% lower.

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