The surplus on Australia's monthly trade account narrowed to a near 2-year low in August coming in well below expectations. The result was, however, impacted by volatility in non-monetary gold exports as the import side lifted for a third straight month.
International Trade — August | By the numbers
- Australia's trade surplus narrowed by $2.009bn in August to $2.643bn — its lowest since October 2018 — against the median estimate of $5.05bn (July was revised to $4.652bn from $4.607bn).
- Export earnings declined by 4.2%m/m to $32.638bn to extend the fall in annual terms slightly to -21.9% from -21.3%.
- Import spending lifted by 2.0% in August to $29.996bn, reducing the pace of decline through the year to -14.6% from -16.9%.
International Trade — August | The details
There continues to be elevated volatility in monthly trade flows during this COVID period. In August, the nation's trade surplus declined sharply by $2.0bn following the $2.9bn fall in July. This coming shortly after a $6.7bn surge in March to a record high of $10.5bn.
On the export side, earnings declined by 4.2% in the month (-$1.4bn) to $32.638bn, which is its lowest level since November 2017. The main influence was in non-monetary gold with a 61.8% fall (-$2.2bn) coming through, with volatility in this category often elevated from one month to the next. Non-rural goods lifted by 2.6% ($0.57bn) to $22.7bn supported by the commodities (metal ores +3% and coal +9%), while rural goods advanced by 12.4% ($0.37bn) to $3.3bn. Services exports, hard hit by the travel restrictions on inbound tourism, continue to ease falling by a further 2.4% (-$0.14bn) to $5.2bn — its lowest level since November 2013.
Turning to imports, spending lifted for a third straight month rising by 2.0% ($0.58bn) to a touch short of $30bn as firms look to build up inventories again and domestic demand improves following the reopening of the economy back in mid-May. Consumption goods advanced by a further 6.3% to $9.3bn (with vehicles +36%m/m) and intermediate goods by another 3.4% to $9.7bn. Over the past 3 months, consumption goods have rebounded by almost 22% and intermediate goods by 6.5%. Capital goods have been volatile of late, falling by 6.9% in August, but they too have rebounded coming out of the shutdown rising by 7.6% over the past 3 months. Services imports, affected by the overseas travel ban, were little changed in August firming by 1.2% to $3.7bn.
International Trade — August | Insights
The sharp fall in the trade surplus in August was affected by the volatility in non-monetary gold exports. As China's economy continues to gather momentum, demand for domestic resources will support the export sector. The rebound evident in imports is a positive development in that it reflects that activity and demand in Australia is coming back again after the reopening.