Australia: Trade surplus widened to $1.75bn - Westpac

In September, Australia’s trade surplus widened by $0.9bn to $1.75bn on higher exports, notes Andrew Hanlan, Research Analyst at Westpac.

Key Quotes

“In September, Australia’s trade surplus printed at $1.75bn, surprising to the high side (mkt median $1.2bn and Westpac $1.4bn), as the rise in export exceeded expectations.”

“Imports were little changed in the month, edging 0.2% higher, broadly as anticipated.”

“Exports increased by 2.9% in September, +$0.9bn, eclipsing our forecast for an increase of 1.2%. Metal ores rose 8.0%, +$0.6bn, on higher volumes and gold rebounded, up $0.2bn, while services continue their strong upward trend, +$0.1bn in the month to be 12.4% above the level of a year ago, to meet rising demand from the Asian region.”

“For the September quarter, the trade surplus was $3.3bn, little changed from the $3.2bn outcome for the June quarter – based on the monthly trade figures. However, the statistician advises that on a quarterly balance of payments basis, the surplus did indeed improve, increasing to $3.5bn from $3.1bn, an increase of $345mn. That widening of the surplus was despite a small decline in the terms of trade, associated with lower commodity prices. Notably, export volumes recovered further after the weather disrupted decline in Q1, up around 3% in Q3 we estimate. At the same time, import volumes are expanding to meet rising domestic demand, including an increase in business investment, up around 2% in the quarter, we estimate. This implies that real net exports will make a positive contribution to GDP growth in the third quarter, most likely broadly in line with our forecast of plus 0.3ppts.”