Australia's trade surplus came in at $12.1bn in July, resetting its record high from the month prior. Elevated commodity prices drove exports to a record high, with iron ore accounting for 41.5% of the monthly total. Imports were held up by intermediate goods as both consumption and capital goods weakened with lockdowns returning.
International Trade — July | By the numbers
- Australia's monthly trade surplus advanced by $1.0bn to $12.1bn in July, well clear of the market consensus for $10.0bn. The ABS revised the June surplus higher, from $10.5bn to $11.1bn.
- Export earnings posted a 4.8% increase for the month to $45.95bn — its highest level on record — elevating growth over the year to 35.8% from 24%. The increase in exports in June was revised up from 3.6% to 4.1%.
- Import spending lifted by 3.3%m/m following a 1.0% rise in the month prior (revised from 0.8%). This drove imports to $33.83bn to be 14.1% higher than a year earlier.
International Trade — July | The details
Elevated commodity prices continued to advance the trade surplus from its previous record high in June; the monthly surplus for July went through $12bn to be up by around $1bn over the period. This widening reflected the acceleration in export earnings associated with commodities, while the underlying details for imports pointed to lockdown effects playing through.
Exports lifted by 4.8% to drive monthly earnings to a record high level at just below $46bn. Non-rural goods were the key contributor, rising by 7.1%m/m to $34.2bn. Within the category, iron ore climbed by 3.5% to $19.1bn for the month to be up by a stunning 66% over the year.
Rural goods lifted by 5.7% supported by meat (8%m/m), wool (11.9%m/m) and 'other' rural products (8.1%m/m). Non-monetary gold was a modest influence, down 2.8% in July. Services exports fell 7.8%m/m as tourism-related earnings plunged (-17.4%), pointing to the impact of the closure of the New Zealand travel bubble arrangement.
For imports, spending was higher overall rising by 3.3% in July to $33.8bn to be in line with pre-pandemic levels. However, the underlying detail reflected shifting spending patterns associated with the return to widespread lockdowns in Australia. Consumption goods posted its weakest monthly outcome in 10 months falling by 3.4% in July. Within this, household electrical items (-9%), new vehicles (-4%), textiles, clothing and footwear (-3.9%) and 'other' consumption goods (-3.5%) saw sharp declines. Capital goods were slightly down over the month (-0.6%), with the weaknesses centered in industrial equipment. However, the declines in consumption and capital goods were more than offset by a surge in intermediate goods (15.4%m/m). This was mainly driven by 'other parts for capital goods' (80.7%m/m), which the ABS reports related to telecommunications accessories and equipment. Services imports were down 2% for the month, with the tourism-related category falling by 31.3%, consistent with the avenue for offshore travel to New Zealand closing.
International Trade — July | Insights
The tailwinds to national income from elevated commodity prices continued through July as export earnings surged to a record high. This came after yesterday's national accounts reported that the nation's terms of trade lifted to their highest level on record in Q2.
