Australia's strong imports keeping trade deficit elevated, but net exports recovering

From the ABS' advanced estimate we already know that goods imports were strong in September (1.4% mom), and this will decisively limit any decline in the trade deficit. Overall imports, i.e. of goods and services, are likely to be a bit less dynamic as services imports have been soft for some time and with the weak exchange rate that is unlikely to change any time soon. 

Meanwhile, exports are expected to have recovered from their August dip, in part thanks to the improvement in the iron ore price in August and September, especially measured in AUD, which should more than offset slightly lower coal prices. The September data will complete the third quarter figures, and confirm that after a substantial negative contribution to GDP growth in Q2, net exports bounced back in Q3. 

Average July/August exports were up 4.3% from Q2's average, while imports were up 1.6%. In addition, export prices were flat, whereas import prices rose 1.4% qoq, meaning that export volumes probably rose 4-5% qoq but imports just 0-1%