International Trade — July | By the numbers
- Australia's trade surplus narrowed by $3.542bn in July to $4.607bn, coming in at its lowest level in 5 months and well short of the median estimate of $5.35bn.
- Export earnings declined by 4.4%m/m to $34.496bn, pushing out the pace of contraction in annual terms to -20.3% from -14.9%.
- Import spending rebounded by 6.9% in July to $29.89bn, slowing the decline in through the year terms to -15.6% from -19.3%.
International Trade — July | The details
The effects of the pandemic continue to lead to volatility in trade flows, with the $3.5bn narrowing in the trade surplus being the largest downward change in a single month on record going back to the early 1970s. Back in March, the trade surplus came in at $10.5bn, by a distance its largest in the history of the series.
On the exports side, total earnings were driven lower falling by 4.4% (-$1.6bn) to $34.5bn, led by weakness in key commodities. Reflecting this, non-rural goods declined by 6.4% (-$1.5bn), with other mineral fuels (LNG) -18% (-$0.63bn), iron ore -4% (-$0.46bn) and coal, coke and briquettes -10% (-$0.32bn). Rural goods fell by 15.1% as weakness came through in cereals and meat. Earnings from services exports recorded their sharpest fall since the emergence of the pandemic contracting by 12.1% (-$0.77bn), possibly pointing to the departure of some overseas students that had remained in Australia over recent months. Some mitigation of these declines came from non-monetary gold, which lifted by $1.25bn in the month.
The 6.9% rise in imports was its strongest in a single month in 2½ years, coming in at $29.9bn, though this still leaves the level down by around 5% pre-pandemic in March and nearly 16% lower than a year ago. July's rebound mainly reflected strong gains across capital goods 18.1% ($1.0bn) and consumption goods 7.4% ($0.61bn), with the latter boosted by shipments of new vehicles that advanced by 90% in the month to $1.3bn. Services imports were little changed at around $3.7bn and continue to be held down by the overseas travel restrictions.
A sharp fall in exports and a strong rise in imports led to a sizeable narrowing of the trade surplus in July. Weakness in resource shipments largely explains the decline in exports, while the strength on the import side came in response to the reopening of the national economy, with firms restoring inventories that had been run down through the shutdown as reported in this week's national accounts for Q2.
On the exports side, total earnings were driven lower falling by 4.4% (-$1.6bn) to $34.5bn, led by weakness in key commodities. Reflecting this, non-rural goods declined by 6.4% (-$1.5bn), with other mineral fuels (LNG) -18% (-$0.63bn), iron ore -4% (-$0.46bn) and coal, coke and briquettes -10% (-$0.32bn). Rural goods fell by 15.1% as weakness came through in cereals and meat. Earnings from services exports recorded their sharpest fall since the emergence of the pandemic contracting by 12.1% (-$0.77bn), possibly pointing to the departure of some overseas students that had remained in Australia over recent months. Some mitigation of these declines came from non-monetary gold, which lifted by $1.25bn in the month.
International Trade — July | Insights
A sharp fall in exports and a strong rise in imports led to a sizeable narrowing of the trade surplus in July. Weakness in resource shipments largely explains the decline in exports, while the strength on the import side came in response to the reopening of the national economy, with firms restoring inventories that had been run down through the shutdown as reported in this week's national accounts for Q2.