The balance on Australia's goods account narrowed to a surplus of $5.7bn in May from a downwardly revised $6bn in April ($6.5bn prior), disappointing expectations for a $6.2bn figure. In positive news, exports (2.8%) saw their strongest rise in 9 months; however, this was outpaced by a 3.9% increase in imports.
The trade surplus for May at $5.7bn was little changed from April ($6bn) but well up from the recent low in March ($4.3bn). This saw the 3-month average for the trade surplus moderating to $5.4bn (from $5.7bn in April) - its lowest since December 2020 - down substantially from its level at the end of 2023 ($9.6bn). An adjustment in commodity prices associated with weaker global growth has weighed on exports while import spending has trended higher amid resilient domestic demand and slower goods disinflation in Australia compared with peer economies.
Exports in May lifted by 2.8% to $44bn (-7.8%yr), their first rise in 4 months and the strongest gain seen since August last year. This was driven largely by non-rural goods (3.7%), with iron ore exports posting a 6.3% rise that broke a run of declines between December and April, falling 17.4% over the period. Today's release reported that higher iron ore exports reflected the combination of a lift in prices and shipment volumes. Across the other commodities, other mineral fuels (mainly LNG exports) advanced by 1.7%m/m and coal exports were a touch softer (-0.2%m/m).
By contrast, rural goods declined (-1.2%) to be down by 15.9% over the year and nearly 25% below their mid-2022 high. Cereal exports have been the major driver of this retracement (-51%yr) coming after prices surged following the disruptions to global wheat exports stemming from the war in Ukraine.
Imports lifted by 3.9% month-on-month coming to $38.2bn, up modestly over the year (3.5%). Spending on imports in May was supported mainly by intermediate goods (6.6%) on the back of a surge in fuel imports (10.8%) as global oil prices advanced. Also driving imports in May were consumption goods (2.4%) and capital goods (0.5%), though both categories were coming off sizeable declines in the prior month of 5.3% and 6.4% respectively.
