International Trade — March | By the numbers
- Australia's trade surplus ripped by $6.737bn to $10.602bn in March against an expected outcome of $6.0bn. February's trade surplus was trimmed from $4.361bn to $3.865bn in today's release.
- Export earnings surged by 15.1% in the month (or $5.558bn) to $42.417bn; the result swinging annual growth from -8.2% to 7.6%.
- Import spending pulled back by a further 3.6% in March (-$1.178bn) to $31.815bn steepening the pace of contraction through the year from -6.7% to -8.6%.
International Trade — March | The details
March's trade surplus of $10.602bn was a strong rise on the surpluses of $5.046bn in January and $3.865bn in February. After seasonal adjustments, the ABS reported its preliminary estimate of the trade surplus to be $19.084bn in the March quarter — an increase of 40.9% from the December quarter last year. As a result, the net export component looks likely to contribute a sizeable 0.4ppt or so to GDP growth in the March quarter.
The export performance in March advanced by 15.1% ($5.558bn) to $42.417bn. The bulk of that increase came from a 14.7% ($3.54bn) lift on non-rural goods as commodity exports rebounded sharply after Tropical Cyclone Damien hit production and shipments in February. As a result, iron ore exports advanced 32% on the month, while strength also came through from other mineral fuels (such as LNG) (+10%) and coal (+6%). The volatile non-monetary gold category lived up to that description by posting a 225% lift ($2.474bn) over March. Rural goods increased by 7.0% in the month ($271m) on broad-based gains across cereal grains, wool and other rural products (including sugar and honey). Against these increases, income from services exports was cut by 9.4% in March ($727m) as inbound travel by overseas tourists and students plunged by 15.4% (-$734m) on the back on COVID-19 (travel restrictions were placed on non-resident arrivals from China in early February) and the earlier impact of the summer bushfires.
Switching to imports, total expenditure on that side of the account fell for the third straight month with a 3.6% contraction (-$1.178bn) coming through in March to $31.815bn. The aggregate has rolled back to its lowest level since late 2017 weighed by the combination of weak private demand conditions and a declining Australian dollar, which fell by 12.0% in US dollar terms and by -9.4% on a broader trade-weighted basis over the year to March according to the ABS's data. That overall fall in import spending was the result of an 18.6% drop (-$1.492bn) in the services sector, with overseas travel collapsing by 35.3% in March (-$1.527bn) to its lowest level in a decade at $2.8bn due to the COVID-19 pandemic. Capital goods recorded a modest slide of 3.3% in the month (-$194m) but has been hit hard over the past year (-12.4%) as businesses have been reticent to invest. Elsewhere, there were small advances in the month from consumption goods (0.1%) and intermediate goods (0.3%).
International Trade — March | Insights
The positive is that net exports will boost Q1 GDP growth nicely, though that still may not be enough to keep a contraction at bay in the March quarter. As the economy rolls over in the June quarter, resources exports may provide some offset given that China — the nation's major trading partner — appears to be managing a successful reopening of its economy after its period of lockdown from the back end of January into February and March.