Australia's trade surplus has narrowed from January's record high but was still elevated at $7.5bn in February. Export earnings declined as iron ore retraced after surging in January, while imports advanced reflecting strength in domestic demand conditions generated by the reopening.
International Trade — February | By the numbers
- Australia's trade surplus narrowed by $2.1bn in February, falling from a record high of $9.6bn in the month prior (revised from $10.1bn) to $7.5bn that came in below the median estimate of $9.9bn.
- Export earnings declined by 1.3%m/m to $38.9bn (prior 3.8%m/m), with a base effect driving up the annual pace to 9.1% from 1.6%.
- Import expenditure advanced by 5.2% in February to $31.4bn coming off a 2.0% fall in the month prior. This reduced the decline in annual terms to -3.6% from -12.2%.
International Trade — February | The details
After soaring to a record high in January, the nation's monthly trade surplus retraced to $7.5bn in February to be in line with its level from December. Export earnings contracted by 1.3% (or -$0.5bn) in the month to $38.9bn as non-rural exports declined by 3.0% after rising strongly in January (7.4%). The main contributor to this was metal ores and minerals (mainly iron ore) exports falling by 7.1% on lower volumes, mostly unwinding the 9.8% surge in the month prior. Rural exports remain a success story for the domestic economy following drought-breaking rain in early 2020, with the category up another 6.6% in February (11.8%yr). Here, cereals are leading the way, rising 18.3%m/m to be 154.1% higher than a year earlier.
Elsewhere, non-monetary gold exports lifted by 6.5% in February, while services exports were a modest drag on overall earnings, falling by 2.7% remaining at a very low level due to the impact of travel restrictions.
Import spending advanced by 5.2% (or $1.6bn) in February to $31.4bn (-3.6%yr). This was a rebound from declines of 1.6% in December and 2.0% in January. The gain in February was led by intermediate goods (12.9%), in which fuels and lubricants were up 30%. Consumption goods lifted 2.7%m/m to be up by 22.1%yr — its fastest annual pace in 11 years reflecting the strength in demand conditions generated by Australia's reopening. Meanwhile, services contributed modestly rising by 3.8% but were 48.0% lower than a year earlier due to the overseas travel ban. Capital goods were soft in February (-0.7%), though the strength in domestic demand conditions and tax incentives included in the 2020 Federal Budget has driven these imports up by 13.1% from a year ago.
International Trade — February | Insights
The trade surplus pulled back by more than was expected but still remained elevated at $7.5bn in February. This was after reaching a record high in the month prior at $9.6bn. Export earnings are 9.1% higher than a year earlier, due mainly to higher commodity prices, while strength in domestic demand since the reopening is helping to lift import spending.