Consumer Good Import Weakness Pointing To Slowing Demand

There was an unexpected widening of Australia’s trade surplus of $2.60bn in February to $13.87bn driven by a 9.1% m/m drop in imports (Jan +5.5%).

• Imports fell sharply driven by non-industrial transport equipment (-35.1%) and are now down 0.5% y/y due to strong negative base effects. Imports of consumption goods as a whole fell 19.3% m/m and -12.7% y/y with all major components down except household electrical items. This is consistent with other indicators pointing to a slowing in domestic consumption. Capital goods imports fell 14.6% m/m but are up 2.8% y/y. Services imports fell 5.4% but are still up 29.2% y/y with tourism down 5.5% m/m.
• Exports fell 2.9% m/m to be up 12.2% y/y (Jan +16.5% y/y) driven by metal ores and minerals (-9.5%). Iron ore shipment volumes were down around 15% while prices still rose. Iron ore exports to Japan and Korea were particularly weak but higher to China. Coal volumes also fell with prices slightly higher, leaving export values flat. Rural, metals and machinery were all higher. Services exports were up 0.5% with tourism +0.6%.
• Exports to China were down on the month, but the data is not seasonally adjusted. They grew a robust 20.4% y/y in February though up from -19.7% in August. Exports were strong to the US, NZ and Japan but weak to Korea, India and ASEAN.
• The ABS announced that the imports of travel services series will now be marked as preliminary due to a high degree of uncertainty in the monthly estimates.

Source: MNI - Market News/ABS

Australia exports by country y/y%

Source: MNI - Market News/ABS