Australia's trade surplus narrowed to around $5bn in November as import spending advanced at its fastest pace in a single month since late 2002 (9.7%) to outpace a 3.5% rise in export earnings. The net result seeing the trade surplus moderate back to its level during the September quarter after an elevated start to Q4, driven by record-high iron ore exports.
International Trade — November | By the numbers
- Australia's trade surplus pulled back by $1.56bn in November to $5.022bn, coming in well below the median estimate of $6.4bn. October's trade surplus was revised sharply lower to $6.583bn from $7.456bn.
- Export earnings lifted by 3.5% in the month to $36.393bn following on from a 4.4% lift in October, with the decline in annual terms moderating to -10.4% from -12.8%.
- Import spending posted its sharpest rise in a single month in nearly 18 years with a 9.7% acceleration in November to $31.37bn, reducing the contraction over the year to -9.5% from -20.6%.
International Trade — November | The details
Spending on imports accelerated sharply by 9.7% in November ($2.774bn) to $31.37bn driven by a 31.4% surge in capital goods amid more moderate increases across the other cargories. Capital goods spending soared by $1.91bn to swing the pace over the year to its strongest in 8½ years at 31.5% from -9.8%. There were broad-based gains across the category with aircraft, telecommunications equipment and other goods the key contributors. Indicative of improving domestic demand conditions as the economy has reopened from its shutdown, consumption goods advanced by a further 3.8% having risen in 5 of the past 6 months to be up by 13.5% over the year — its fastest pace since early 2018. Intermediate goods posted a 3.5%m/m rise but are 15% lower on a year earlier. Services imports remain at a low level having been heavily restricted by the overseas travel ban.
Export earnings lifted by 3.5% overall in November — a slightly more moderate outcome than October's 4.4% rise — to $36.393bn. This was led by a rise in non-monetary gold (44.7%) after declining in the month prior. Cereals drove a 6.3% rise in rural goods exports adding to the category's 7.5% increase in October. Non-rural goods consolidated in November as iron ore exports pulled back from a record high in the month prior. Services exports were little changed in the month rising by 1.9% as restrictions on inbound tourism continue to weigh.
International Trade — November | Insights
The magnitude of the pullback in the trade surplus in November was sharper than expected due to the surge in import spending. This mainly occurred in capital goods and could prove to be a temporary spike, while the export side is likely to receive a boost in the months ahead on the back of soaring iron ore prices.
