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Australia’s trade surplus worsens slightly in February, following steady growth in exports

Australia’s trade balance worsened slightly in February to a surplus of AUD825m, while January’s surplus was revised down to AUD952 million from the original AUD1,055 million. Total exports were barely changed in the month, as a large decline in non-monetary gold offset a rise in exports of metal ores and minerals, coal and other mineral fuels.

Imports were up slightly in the month as a rise in core imports were offset by falls in civil aircraft and fuels. This supports the view that the investment pipeline in Australia will support economic growth in 2018.

Total export values were practically unchanged in the month, increasing by AUD2 million, after increasing 4.8 percent in January. The main soft spot for exports in February was the volatile non-monetary gold segment, which fell 23 percent (AUD505 million).

Offsetting this were rises in metal ores and minerals (2.6 percent m/m), coal (1.1 percent) and other mineral fuels (2.6 percent). Rural good exports rose sharply (16.5 percent m/m) mainly due to a 25.1 percent rise in wool exports. Service exports rose 0.6 percent m/m as transport (0.9 percent), travel (0.5 percent) and other services (0.7 percent) all rose in February. However, manufacturing exports fell 11.41 percent m/m.

Meanwhile, total import values rose 0.4 percent m/m (AUD130 million) in February, following the 2.4 percent decline in January. Increases were broad-based across core imports. Consumption goods increased 6.5 percent m/m, due to a 19.8 percent rise in non-industrial transport equipment and 6 percent increase in textiles, clothing, and footwear. Capital goods (ex-civil aircraft) rose 3.6 percent m/m as machinery and equipment surged 15 percent m/m and transport equipment increased 12.1 percent.

"Overall though, the import numbers, particularly for capital and intermediate goods, are indicative of the improvement in Australia’s investment outlook," ANZ Research commented in its latest report.

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