International Trade — October | By the numbers
- Australia's trade surplus fell by $624m in October to $A2.316bn, compared to the median forecast for a surplus of $3.0bn (Prior rev $2.94bn lowered from $3.017). The 3-month average increased to $A2.518bn from $A2.368bn.
- Earnings from goods and services exported increased by 1.3%, or $493m, during the month to $A38.045bn
- Total goods and services imported jumped by a stronger 3.2%, or $1.116bn, in October to $A35.729bn
The trade balance represents the difference between the value of goods and services exported (credits) and the value of goods and services imported (debits) during the month. The fall in Australia's trade balance of $624m is the net result of export earnings rising by $493m and the bill for imports increasing by $1.116bn.
On the exports side, the $493m increase was driven by non-rural goods (+4.3%) reflecting a 12% rise in coal exports. The ABS reported that coal export volumes lifted across the board, which comes after disruptions to shipments recently. The other main contributor was from fuels (4%), reflecting increased LNG export volumes. Moderating those gains, the value of rural goods exported fell by 6.7% in the month with drought conditions impacting the agricultural sector. Non-monetary gold declined by a sharp 23.7%, though volatile movements such as this are not unusual for this component. Services exports lifted for the 7th consecutive month with a 1.1% rise in October. Tourism is the key driver, supported by a lower Australian dollar, and lifted by a further 2% in the month.
For Imports, the increase of $1.116bn to the bill was mostly driven by strong rises from capital goods (+7.8%) and intermediate goods (+5.2%). Capital goods broadly relate to items pertaining to business investment, with machinery and equipment (+6%) and telecommunications equipment (+13%) driving October's rise. The result from intermediate goods reflected a surge of 11% from fuel, with global oil prices in the order of 30% stronger in October than they are at present. Consumption goods lifted modestly by 1%, with a 5% rise in the value of textiles, clothing and footwear imported. Services imports were little changed (-0.3%) in the month. 'Other services' — mostly business services — fell by 1%, likely impacted by a weaker currency.
This was a softer-than-expected start to the quarter, with imports clearly outpacing growth in export earnings, though the 3-month average for the trade balance did lift by around 6% in October. The export performance was impacted by drought conditions and also volatility from non-monetary gold, but there were strong increases in coal and LNG shipments. The rise in imports was much stronger than it had been in recent months and while a weaker Australian dollar and strong oil prices were a factor, it is also likely that volumes lifted.