Australia posted its first monthly trade deficit since 2017 in March (-$1.8bn), with imports surging due to the tech-related capex boom and the Middle East fuel crisis. Imports accelerated at their fastest pace in more than 4 years (14.1%), while exports fell by nearly 3%.
The monthly trade balance swung from a surplus of $5bn in February to a deficit of $1.8bn in March. That was the largest deficit since June 2016, and the first deficit at all since December 2017. Import spending surged by 14.1% in March to $45.8bn, overtaking exports that fell by 2.7% to $43.9bn. Across the first quarter of the year, imports lifted by 2.5% and exports declined by 1.2%. Given the quarterly movements in trade prices (imports 0.1% and exports 0.5%), net exports are shaping up as sizeable drag on Q1 GDP growth - though note that the monthly trade figures provide no visibility on services trade.
Monthly imports (14.1%) posted their fastest rise since February 2022. The tech-related capex boom in data centres saw ADP equipment soar by 204%, driving the capital goods category to 36.8% increase in March ($12.7bn). Intermediate goods were the other notable movement, lifting by 8.5% to $18bn on the back of the acceleration in oil prices following the Middle East conflict. Fuel imports alone rose by 53.6% to $6.1bn, their highest level since late 2023.
Export revenue declined by 2.7% in March, reversing the gain in February (4.2%) to fall back to $43.9bn. Rural goods were the major driver, retracing by almost 12% with weakness broadly based across meat, cereal and wool exports. Non-monetary gold (-6.1%) cooled, but the value of these exports was still up around 42% on 12 months ago, reflecting the strength of the safe-haven bid in the commodity. Exports of non-rural goods (includes the major resources) were broadly flat in March (0.3%) but fell by 5.6% across the quarter. This came on the back of declines in iron ore (green line in chart below) -8.1%, coal (grey line) -4.4%, and other mineral fuels (mainly LNG) (pink line) -1.6%. By contrast, non-monetary gold (yellow line) climbed 23.7%.
