The August trade balance narrowed slightly to $8324mn (July A$8967mn) but was lower than expected. Imports were expected to contract by 1% m/m but actually grew a solid 4.5%. Export growth also exceeded expectations but less so at 2.6%.
- Solid goods import growth of 4.8% m/m reflects continued robust domestic demand in Q3. Imports of consumption goods were a very strong +7.1% while imports of fuel soared 11.1%. Travel and passenger transport services imports again reflected the increased number of Australians travelling abroad (up 1.2% and 8.6% respectively).
- Broad based strength in exports of rural products (+6.8%) and some recovery in coal and mineral fuels exports supported overall exports. Services exports were driven by the emerging recovery in tourism with passenger transport +20.5%.
- Exports to China remained soft falling 20.2% y/y, as the zero-Covid policy continues to weigh on demand and China rotates away from some Australian commodities to cheaper Russian ones. However, Australian exporters seem to be adjusting with exports to Korea and Japan soaring (see chart below).
Source: MNI - Market News, Refinitiv, ABS