Commodities Drive Larger Surplus, Weak Imports Not Trend Yet

The Australian trade surplus for September came in well above expectations at A$12.44bn and August was revised up A$0.34bn to A$8.66bn. This result was due to higher-than-expected export growth of 7% m/m and weaker import growth of 0.4%.

• The almost flat import result was a surprise given the strength of domestic demand recently but imports of consumer goods fell 7.2% m/m with non-industrial transport equipment (cars, bikes, etc) particularly weak at -14.6% which may reflect both demand and supply issues. Also other consumer goods fell 12.9 m/m. Imports of capital goods rose 5.1%, a positive indicator for the investment outlook. Services imports rose only 0.6% m/m with tourism up 3.4%.
• Imports of consumer goods can be volatile and the weak September result followed two very strong months, also in recent years September has tended to be weak despite seasonal adjustment. It is too soon to say that import data is pointing to softening consumer demand and actually it showing robust momentum and pointing to retail sales staying robust.
• Exports saw strength in value terms across metal ores & minerals (+8.7%) and fuels (+19.5%). The quantity of natural gas exports rose 8.5% m/m and of iron ore (lump) +2.5% (to China +8.4%). Services export values grew 6.3% m/m with the tourism component up 12% as the world opens up after the pandemic.
• Exports to Australia’s major destinations over the year remained very solid with exports to China +17.9% y/y after contracting for 9 months.