Australia's trade surplus halved in May to $2.2bn, its narrowest since August 2020 - defying expectations to come in at $5bn. The surplus fell from $4.9bn in April, revised down from an initial estimate of $5.4bn. Imports (3.8%) lifted at their fastest pace since last December as exports (-2.7%) declined for the third time in the past 4 months. US-bound exports normalised the month following the Trump administration's liberation day tariff announcements.
The trade surplus narrowed sharply from $4.9bn in April to $2.2bn in May, its lowest level going back to the early days of the pandemic in August 2020. The narrowing came on the back of a decline in exports (-2.7%) and a rise in imports (3.8%), the latter posting its fastest uplift of the year. Across the past 3 months, the trade surplus averaged $4.4bn.
Exports were down 2.7% for the month in May coming in at $42.4bn, turning annual growth negative to -1.6% from 2.2% prior. Declines in the month were seen across all major categories: rural goods -3.5%, non-rural goods -2.4% and non-monetary gold -3.4%. Non-rural goods saw their 4th fall of the past 5 months, with LNG (-11.5%) and coal (-2%) driving the weakness in May. Meat (-15.7%) and wool exports (-16.5%) hit the rural goods category.
After surging to front run the Trump Administration's new tariff regime, exports bound for the US retraced to around $2bn in May having touched as high as $6bn in January.
Import spending lifted by 3.8% in May, rising through $40bn to a new record high. Annual growth increased from 5.5% to 6.9%. Capital goods were the key driver surging by 8.6% coming off a similar gain in April (8.5%). Meanwhile, consumption goods were up by 3%, underpinned by a strong rise in vehicle imports (7.9%). Intermediate goods (1.8%) rose for the first time in 4 months, with the falling value of fuel imports being a major driver of that weakness.
