Rising export earnings have widened Australia's trade surplus back above $10bn in April, with the early stages of the recovery in inbound tourism and strength in commodity prices the key drivers. Imports declined but remain at an elevated level.
International Trade — April | By the numbers
- Australia's trade surplus widened from $9.7bn in March to $10.5bn in April, coming in above the consensus estimate of $9bn.
- Exports broke above the $50bn line, increasing by 1% on the month to be up by 23.7% over the year. This followed a flat outcome in March.
- Following March's 4.6% fall, imports were 0.7% lower on the month to $39.9bn, a level that is 26.9% higher over the year.
International Trade — April | The details
The monthly trade surplus moved back above $10bn in April as export earnings advanced and import spending fell. This was driven by a narrowing in the balance on services trade ($0.5bn), with the easing of travel restrictions boosting the domestic tourism sector. The balance on goods trade was a little wider ($0.3bn) on firmer commodity prices.
Export earnings continue to reset to new record highs. April's total saw earnings lifting above $50bn for the first time, up by a striking 16% on the pre-pandemic high in mid-2019. In the month of April, higher export earnings were driven mainly by services (9.6%m/m), with tourism (27%m/m) starting out on its recovery following the wider easing of restrictions on inbound travel in late February.
Earnings from exports of rural (3.3%) and non-rural goods (1%) also advanced in the month. Rural goods rebounded after severe wet weather events on the east coast hit production in March, driving a 3% fall in earnings. Cereals led the way, up 8.3% in the month, likely also reflecting higher prices on the spillover impacts from the Ukraine war. Rises from other mineral fuels (LNG) (5.2%) and metals (16.8%) on the back of higher prices drove the increase in the non-rural goods category.
Import spending softened by a further 0.7% in April after falling by 4.6% in March. The declines were broad-based across consumption goods (-1.1%), capital goods (-1.2%) and intermediate goods (-0.8%). The fall in consumption goods was driven by vehicle imports (-20.5%), receding from a recent surge after supply chain pressure eased. A similar dynamic played out in machinery and industrial equipment (-4.8%), weighing on capital goods. Intermediate goods were lower overall, down 0.8%m/m. This was driven by processed industrial supplies, falling 12%m/m following a 9.6% decline in March. This is likely reflecting the unwind from the acquisition of a large volume of R.A.T tests and additional Covid vaccines.
Within intermediate goods, there was one very large rise in April. This came from fuels and lubricants (15.9%), with petrol prices surging higher in response to the war in Ukraine. Accordingly, the value of fuel imports lifted through $5bn in the month for the first time on record.
International Trade — April | Insights
The trade surplus remained elevated, widening out to $10.5bn in April. Unlike many other countries, Australian national income is rising amid the current supply shocks in the global economy. The nation's terms of trade hit a new record high level in the March quarter (see here). Rising export earnings also underpinned another large current account surplus of more than 1% of GDP in Q1.
