Trade Data Show Softening Capex Imports & Strong Commodity Volumes

The merchandise trade surplus narrowed slightly in December as export growth underperformed import growth. It came in at $10.96bn after $11.76bn with imports rising 4.8% m/m and exports 1.8%. The data doesn’t change the view of the economy with signs that the domestic economy is softening and export growth solid to Australia’s largest trading partner.

• Goods exports rose for the third consecutive month in December but were still down 5% y/y but this improved from -8.5%. The December rise was driven by non-monetary gold +20.2% m/m. Key metal ores and coal export values fell on the month but metals rose strongly.
• Merchandise imports rose for the first time since September driven by transport equipment parts and are down 1.8% y/y. Consumer goods rose 9.8% m/m but are down 2.6% y/y, in line with weak household demand. Capex imports are signalling softer investment growth as they fell 1% m/m in December, third straight drop, and are now down 5.1% y/y.

Source: MNI - Market News/ABS

• Furniture retailers have said that the industrial disputes in Australian ports and rerouting of ships away from the Red Sea are now resulting in delays of imports. This may be seen in the Q1 import data.
• Exports to China remain robust rising 14.7% y/y, the 16^th straight positive. But shipments to the rest of Asia are weak with Japan down 33.5% y/y and Korea -21.2% y/y and Indonesia -21.9% y/y. Iron ore volumes to China and coal to Japan and Taiwan were robust. While there was a 2.8% drop in LNG unit values, export volumes rose strongly by 16.8% despite the mild winter in north Asia.

Source: MNI - Market News/ABS