Australia's trade surplus narrowed at the start of 2023 but remained at highly elevated levels. In January, import spending (4.6%) outpaced export earnings (1.4%) as pressures hampering global supply chains showed further signs of easing.
International Trade — January | By the numbers
- Australia's trade surplus narrowed to $11.7bn in January from an upwardly revised $13bn in December ($12.2bn initially reported).
- Exports ended a run of three consecutive declines posting a 1.4% rise in the month to $58.8bn (16.8%yr).
- Imports reaccelerated to see their fastest rise in 6 months lifting by 4.6% to $47.2bn (24%yr).
International Trade — January | The details
The opening month of 2023 saw momentum in imports pick up after weakening into year-end, while exports continue to lift. The trade surplus averaged $13bn over the final 3 months of 2022, so the January result of $11.7bn was a clear step lower.
Import spending contracted by 3.7% in the December quarter but rebounded strongly by 4.6% to open the year. Consumption (11.7%) and capital goods (10%) lifted sharply on an influx of vehicle imports (passenger vehicles surging 30.9% and industrial vehicles up 57%), with capital goods also boosted by telecommunications equipment (57.3%). These increases likely reflect the easing of constraints that have hampered global supply chains. Intermediate goods (-3.2%) fell for the 5th month running as the value of fuel imports (-7.4%) continued to slide on lower prices.
Services spending on imports lifted by 2.9% in January to be around 40% higher than a year earlier. Overseas tourism has seen a strong recovery but is still well short of pre-pandemic levels of spending.
Export values increased by 1.4% in January to sit just off record highs. Goods exports advanced in the month (1.1%) on the back of non-rural goods (1.5%) as iron ore (12.8%) saw its strongest rise in more than a year on higher prices. The other commodity categories were weaker across the board. Rural goods (-2.9%) declined with cereal exports (-9.9%) pulling back from very elevated levels.
The post-Covid recovery in services exports continued with a 3.1% rise in January to be up by 55.1% over the year. Rising overseas arrivals for holidays in Australia has seen tourism-related spending lift; however, it is still down by around 25% on end-2019 levels.
International Trade — January | Insights
Net exports were the main driver of economic growth in a soft December quarter for domestic demand (see here). While commodity prices have retraced from their highs, they remain sufficiently elevated to be bolstering national income. The post-pandemic recovery in the services sector has been strong but still has some way to go.
