Australia's trade surplus was $8bn in July, below expectations ($10bn) and narrowing from $10.3bn in June (revised from $11.3bn). This was the nation's smallest monthly trade surplus since February 2022. Falling exports (2%) and rising imports (2.5%) drove the narrowing in the trade surplus.
Following a 3.1% fall in June, exports declined a further 2% in July to $53.9bn, down 2.8% on 12 months ago. This month, volatile non-monetary gold (-31.9%) was the major factor. Declines in key commodity prices weighed on non-rural goods (-1.4%), with the value of these exports retracing substantially over the past year (-9.9%). Rural goods lifted 7.7%m/m to remain at elevated levels. Although lower prices have seen cereal exports decline, strong demand is supporting meat and other rural goods exports.
Services exports softened in July (-1%) but are now in an expansionary phase having recently recovered from their pandemic-induced fall. This reflects the return of overseas visitors coming to Australia for holidays and to study.
Imports lifted 2.5% in July ($45.9bn), mostly reversing a 3.3% fall in June. Broad-based strength was evident with goods (2.9%) and services (1.3%) advancing. Goods imports were supported by consumption goods (6.9%) - as vehicle imports rebounded (24.7%) - and capital goods (4.2%) on the back of telecommunications equipment (8.1%). By contrast, weakness came through in intermediate goods (-1.5%), which largely reflected a 4.9% side in fuel imports on lower prices.
Services imports are up by a sharp 7.2%yr, with tourism services leading the way (39%yr). There was a further 1.3% lift from services in July as tourism rose 3%. Demand for overseas travel to Europe was very strong during the Australian winter.
