Australian trade surplus narrows in July, fall in metal ores and mineral exports weigh

Australian trade surplus narrowed during the month of July, weighed down by fall in export values of metal ores and minerals. There were also signs that the East Coast drought may be weighing on exports, according to the latest report from ANZ Research.

The monthly trade balance narrowed to AUD1551 million in July. June’s surplus was revised up to AUD1973 million (from AUD1873 million). The deterioration reflects exports falling 1 percent m/m, while imports rose 0.1 percent.

Total export values were up 13.7 percent y/y. Resource goods were up 0.7 percent m/m, led by a 37.1 percent increase in metals and a 3.3 percent rise in coal. However, metal ores and mineral fell 4.6 percent (AUD367 million).

Rural good exports fell 1.8 percent m/m (AUD76 million), with this due to a 10.5 percent fall in cereals and a 7.9 percent decline in wool. Service exports rose 0.5 percent m/m, with transport exports rising 2.8 percent, offsetting a 0.6 percent fall in travel.

Total import values rose by 0.1 percent m/m in July, following a 0.8 percent decline June. Year-on-year, imports are 9.8 percent higher. Intermediate and other goods were the main positive, rising 5.6 percent m/m, mainly due to a 23.5 percent surge in imports of fuels and lubricants. The volatile non-monetary gold segment was also a positive, rising 10.8 percent. Consumption goods fell 3.7 percent m/m, as textiles, clothing and footwear fell 9.1 percent and car imports declined 0.4 percent (AUD321 million).

"Given our outlook for car sales we would expect to see even greater declines in car imports in coming months," the report added.