Iron ore exports drove a widening in Australia's trade surplus to $3.4bn in December - though that was slightly below expectations ($3.5bn). Resurgent demand, a key factor in the RBA hiking rates on Tuesday (see here), was reflected in a sharp rise in import spending in the December quarter (4.2%), compressing the quarterly trade surplus to $10.3bn - its lowest level in more than 5 years.
Australia's trade balance - the spread between export earnings ($44.6bn) and import spending ($41.3bn) in goods trade, both in AUD terms - was in surplus to the tune of $3.3bn in the month of December, up from $2.6bn in November. The trade surplus remained on its narrowing trajectory in 2025. This continued the descent from the extraordinarily high levels reached during the pandemic recovery when export revenue flooded into government and company coffers as commodity prices soared and borders reopened. In the December quarter, the trade surplus was $10.3bn - down from $14.9bn in Q4 2024 and settling at its lowest level since Q3 2020.
Export revenue increased by 1% in the month of December to $44.6bn, up 3.7% on 12 months earlier. The key movement was metal ores and minerals (predominantly iron ore), with the value of those exports rising by 3% to $14.2bn. ABS data indicated this uplift reflected a large rise in shipments to offshore markets, as prices of the commodity were recorded to have fallen in December. Meanwhile, rural exports - including meat and other produce - rose for the third month running (2.5%), lifting to a new record high of $7.1bn. Non-monetary gold exports notched back-to-back declines in December (-0.9%) but still had a stellar year, with exports more than doubling (107.9%) on the back of safe-haven demand and central bank buying.
For the December quarter, exports rose by 3.3% - remarkably this was their strongest quarterly movement since Q2 2022 - to come in at $134.8bn, an elevated level but well off the record highs around $155bn a few years ago. The rise in quarterly exports looks to be almost entirely price-driven; the ABS reported last week that export prices increased by 3.2% in Q4.
Spending on imports declined by a modest 0.8% in December to $41.3bn, which followed a 0.2% fall in November. But those movements belied the broader trend in the quarter, which saw spending accelerate by 4.2% - its fastest quarterly rise since Q3 2022 - to a record high of $124.5bn. According to the ABS, import prices were only up by a moderate 0.9% in Q4 - indicating that rising demand was the key factor behind the acceleration in spending.
Consumption goods rose by 2.2% in the quarter on the back of gains in categories such as food (3.9%), clothing and footwear (0.9%), household appliances (0.9%) and vehicles (0.4%). Capital goods - associated with business investment - slowed (-0.9%) after surging in Q3 (4.1%). Meanwhile, intermediate goods posted a 3.4% rise in Q4 - despite a fall in fuels and lubricants (the largest category) as oil prices declined.
