Australia’s trade surplus printed at $1.0bn reviewed - Westpac

Analysts at Westpac explained that Australia’s trade surplus printed at $1.0bn, exceeding expectations (mkt median $0.85bn and Westpac $0.5bn). The main source of surprise was an upward revision to July, to $0.8bn from $0.46bn.

Key Quotes:

"Imports were flat in the month, marginally better than we anticipated, a forecast -0.3%.

Exports increased by 0.5%, a little more resilient than our forecast, for a decline of 0.2%. The detail was a mixed bag, as we foreshadowed, albeit with the negatives a little less pronounced than we had allowed. No surprise that metal ores was the big positive, jumping 10%, up $650mn, on a spike in the spot iron ore price, climbing to US$76/t from $67. Against that, falls were evident in coal, likely on lower volumes due to disruptions, and in gold and base metals.

For the September quarter, the trade performance to date has been underwhelming. The monthly trade surplus is running at an average of $0.9bn, a fraction below the June quarter outcome of $1.0bn. The expectation was that the surplus would widen in the quarter, boosted by higher commodity prices. Pending a late flurry of exports in the September month, there is the risk that real net exports are flat to a negative in the September quarter, rather than being the positive for growth that we have factored into our Q3 GDP forecast. To date, export volumes appear to be disappointing, dented by some one-off disruptions, particularly in the resources sector."