The fastest rise in import spending (5.9%) in 15 months saw Australia's trade surplus narrow sharply from $6.8bn in November to $5.1bn in December, coming in well below expectations ($6.7bn). The trade surplus came under material compression over 2024 as lower commodity prices weighed on exports (-2.9%yr) while a weaker Australian dollar and resilient demand contributed to higher import spending (9.2%yr).
December's trade surplus was a relatively modest $5.1bn after widening in November to $6.8bn, a high since February 2024. That narrowing reflects the broader theme that played out over 2024: the trade surplus averaged $5.7bn per month in 2024, well below the elevated levels of $13.5bn in 2022 and $10.4bn in 2023.
Import spending has held at elevated levels over recent years. Domestic demand has remained resilient well past the pandemic rebound; inflation has slowed but price levels have remained high; and the Australian dollar has weakened.
In the most recent month, imports lifted by 5.9% - their fastest month-on-month rise since September 2023 - led by increases in capital (10.6%) and intermediate goods (3.8%). Over the final quarter of the year, imports rose by 1.1% to $38.9bn
Exports have been in decline since peaking in mid-2022, a retracement in commodity prices the driving factor as global growth slowed post the pandemic recovery. However, the momentum was starting to turn into year-end as exports strung together their third consecutive increase following a 1.1% rise in December. The key movements were: non-rural goods +2.3%m/m (with iron ore +3.8%) and rural goods +9.1%m/m. For the quarter, exports advanced by 2.5% - just the second quarter-on-quarter increase since the mid-2022 peaks. Helping to underpin that outcome was non-monetary gold (18.7%q/q) as the price of the commodity rose to record highs amid global economic uncertainty and increased market volatility. Meanwhile, rural goods also surged during the quarter rising by 10%.
