Independent Australian and global macro analysis

Thursday, November 2, 2023

Australia's trade surplus narrows to $6.8bn in September

Australia's trade surplus narrowed sharply from $10.2bn in August to $6.8bn in September. This was the lowest monthly surplus since March 2021. Driving the narrowing was a softening in exports (-1.4%) and an acceleration in imports (7.5%). Regrettably, the series now only measures goods trade with the ABS discontinuing its estimates of services trade, a major component of the Australian economy. 



The surplus on goods trade contracted by around $3.3bn during September as export earnings declined by $0.7bn (to $45.6bn) and spending on imports increased by $2.7bn (to $38.8bn). This left the surplus in September at $6.8bn - a low back to March 2021 - and saw the 3-month average figure fall by $0.9bn to $8.3bn. 


The 1.4% decline in export earnings was the third fall in the past 4 months; exports remain elevated but declined to an average of $45.3bn in Q3 from $50.8bn 12 months earlier. September's fall was driven mainly by the volatile non-monetary gold (-39.2%). By contrast, rural goods advanced 5%m/m - supported by meat, wool and rural products - and non-rural goods lifted 1.7%m/m as iron ore (4.7%) and coal (3.5%) exports bounced. LNG exports slid 2.3%m/m.  


Spending on imports increased 7.5% in September, its largest month-on-month rise since May 2022. On average, imports were $37.1bn in Q3, down slightly on the same period 12 months ago ($37.9bn). September's rise was driven by a 23.3% surge in capital goods orders, with industrial transport equipment increasing by 73.3% (or by around $1.1bn) and machinery and industrial equipment lifting 10.2% (or $0.3bn). 


Intermediate goods were 3.4% higher following a 7% lift in August. This has largely reflected higher global oil prices, with the value of fuel imports rising 22.2% over the past two months. Meanwhile, consumption goods firmed by 0.3%m/m, with clothing and footwear and leisure goods than main contributors.