International Trade — December | By the numbers
- December's trade surplus was $A5.223bn missing to the downside of the consensus forecast of $5.5bn. November's trade surplus was revised down to $5.518bn from the $5.8bn figure intially reported by the ABS.
- Export earnings lifted by 1.4% in the month to $41.293bn to broadly match the 1.3% increase in November (revised from 1.8%), as the annual pace accelerated from 5.1% (revised from 5.5%) to 8.3% driven by a base effect.
- Import spending advanced by 2.4% in December to $36.070bn mostly retracing the 2.8% contraction in the month prior. The annual pace swung from -2.7% to 5.8%, which was also accentuated by base effects.
- The trade surplus for Q4 was $14.706bn ($3.965bn in October, $5.518bn in November and $5.223bn in December) stepping down from a record high level in Q3 at $19.627bn. After seasonal adjustments, the trade surplus corrected sharply by $4.692bn or 25.5% over the quarter to $14.469bn the ABS estimates.
International Trade — December | The details
Export earnings lifted by 1.4% (or $557m) in December to $41.293bn to be 8.3% higher through the year. However, softness hit in Q4 as earnings contracted by 3.5% to reflect the drag from weaker commodity prices. In December, exports were led by a 1.1% rise ($289m) from non-rural goods, most notably from metal ores and minerals (inc iron ore) ($348m) and other mineral fuels (inc LNG) ($137m). Volatile non-montary gold exports lifted by 14.0% ($266m) in the month, while rural goods increased by 1.6% ($63m) to more than offset November's 1.1% fall. Services exports fell by 0.7% in the month (-$62m) on weakness in tourism, though the ABS reported no discernible impact from the bushfires.
Import expenditure advanced by 2.4% in the month ($853m) to $36.070bn and was up by 5.8% on a year earlier. For the quarter, imports were broadly steady rising by a modest 0.5%. December's increase was driven by strong gains from capital goods (6.0%m/m) and consumption goods (3.6%m/m), while services saw their strongest monthly rise (2.4%) since March 2018, with a lower Australian dollar a key factor as these purchases become more expensive. Intermediate goods were up modestly overall (0.6%) despite a strong rise from fuels and lubricants on higher oil prices.
International Trade — December | Insights
The decline in the trade surplus in Q4 appears mainly to be price related, with last week's international trade prices data implying the terms of trade fell in the order of 4.5% over the quarter as commodity prices retracted from highly elevated levels. In Q3, net exports contributed modestly to activity (0.2ppt) and indications are that it will be a similar outcome for the December quarter.