Australia's trade surplus narrowed for a second consecutive month, pulling back from $7.6bn to $5.6bn in March. Exports fell a further 1.7% in March extending the 1.3% fall in the month prior as import spending posted back-to-back monthly gains of more than 4%.
International Trade — March | By the numbers
- Australia's trade surplus narrowed by $2.02bn in March, falling to $5.57bn from $7.60bn in the month prior, coming in well below the median estimate of $8.2bn.
- Export earnings declined by 1.7%m/m to $38.27bn (prior -1.3%m/m), with base effects swinging the annual pace from 8.6% to -5.6%.
- Import spending advanced by 4.3%m/m to $32.7bn following on from February's 4.7% rise. Annual growth turned positive for the first time since December 2019, rising to 5.7% from -4.2%.
International Trade — March | The details
March's trade surplus of $5.6bn was the narrowest since last November and came after a near-record $9.5bn in January and $7.6bn in February. All up, the trade surplus for the March quarter was $22.7bn, up from $19.7bn in Q4 of last year. But last week's trade prices data suggests this increase was driven by surging commodity prices rather than increased volumes.
For exports, total earnings declined 1.3% in March to $38.3bn but were up 5.4% overall through Q1. The volatile non-monetary gold category was the major influence in the month, pulling back by 25%. Outside of this, the moves were modest with rural goods -0.7%m/m, non-rural goods 0.6%m/m and services -2.0%m/m. For the quarter, rural goods outperformed with a 13.0% rise — the sector a positive news story for the domestic economy and continues to rebound following drought-breaking rain early last year. Meanwhile, non-rural goods advanced by 7.6%q/q on the back of a 9.4% boost from iron ore exports. Services exports remain heavily affected by pandemic restrictions on travel and fell 6.7% in Q1.
Turning to imports, expenditure advanced by 4.3% in March to $32.7bn to be 3.4% higher for Q1. Gains were recorded across the board in March with capital goods +4.7%, intermediate goods +3.2%, consumption goods +1.5%, and services a modest +0.5%. For the quarter, intermediate goods lifted by 8.6%, strongly supported by the impact of the rebound in global oil prices. Consumption goods advanced by 2.6% in Q1, led by strong demand for household electrical items and vehicles. Capital goods were weaker in the quarter (-3.1%) but this was after a 13.5% surge in Q4 as activity in the economy rebounded and firms took advantage of expanded asset write-off provisions. Meanwhile, services were a moderate influence in Q1 rising by 1.9%.
International Trade — March | Insights
Overall, there are mixed implications from today's report. Net exports look to be a weight on growth in the first quarter in a volume sense, though in nominal terms national income will receive a sizeable boost from elevated commodity prices.