International Trade — December | By the numbers
- The trade surplus increased by $1.425bn in December to $A3.681bn, vastly ahead of the median forecast for $2.225bn. November's initially reported surplus of $1.925bn was revised up to $2.256bn in today's update.
- Export earnings declined by $634m, or by -1.6%, in December to $A37.924bn, with annual growth at 16.2% (prior rev: +1.2%m/m, +21.2%Y/Y)
- In comparison, the value of goods and services imported fell by a sharper $2.058bn, or by -5.7%, in the month to $34.244bn, which saw annual growth plummet to -0.9% (prior rev: +1.3%m/m, +14.2%Y/Y)
International Trade — December | The details
Australia's export earnings declined by a relatively modest 1.6%, or $634m, in December, which was accentuated by a sizeable fall (-57%m/m, or -$1.034bn) in the often volatile non-monetary gold category. However, earnings from rural goods exports increased by 9.5%, or $353m, to $4.056bn, driven by cereals. Non-rural goods were little-changed rising by just 0.1%, or by $33m, to $25.061bn.
The non-rural goods category includes the major commodity exports (iron-ore, coal an LNG), which were all softer in December. This was mitigated by gains from metals, transport equipment, and machinery.
Services exports were broadly-flat in December at +0.2%, or +$16m, to $7.982bn. This was driven by 'other services' rising by $15m to $2.079bn, while tourism was essentially unchanged at $5.507bn.
For imports, the 5.7% decline in the total for December was the sharpest monthly contraction since February 2012. In nominal terms, the $2.058bn decline was broad-based across; capital goods (-$1.070bn) and consumption goods (-$653m), while 'intermediate goods' used in production also fell (-$717m). These contractions were particularly sharp given their recent upward trends (see below). Service imports lifted by 3%, or by $222m, to $8.510bn in a result that was driven by overseas tourism (+$295m).
December's trade surplus of $3.681bn follows surpluses from October ($2.285bn) and November ($2.256bn) coming to a total of $8.222bn for Q4, up from $6.248bn in the previous quarter. However, the ABS advised that after seasonal adjustments, its preliminary estimate for Q4's trade surplus was $8.506bn, which is an increase of $2.712bn (+46.8%) over the quarter.
International Trade — December | Insights
While the trade surplus in December vastly exceeded expectations, the underlying detail was disappointingly soft given that it was driven by a sharp contraction in imports with exports also declining, though the magnitude was not nearly as severe. The estimated increase in the trade surplus over Q4 is sizeable, however; last week's International Trade Price Indexes data indicates this may have been driven by stronger prices, particularly for key commodity exports, with the terms of trade potentially up by around 3.8% in the quarter. While positive from an income perspective, net exports within GDP calculations reflect volumes. Net exports added 0.3ppt to economic growth in Q3, though a reduced contribution appears likely for Q4.