Surplus moderates from $7.3bn to a still high $5.9bn, broadly as anticipated, as iron ore price spike unwinds.
Detail
- In August, the trade surplus moderated from $7.3bn in July to a still high $5.9bn.
- This was broadly as anticipated, (market median $6.1bn and Westpac $5.6bn).
- Exports: pulled-back, down 3.4%, -$1.5bn, meeting our expectations.
- Imports: slipped, down 0.4%, which was a little softer than we anticipated (a f/c +0.6%)
Additional detail
Export earnings fell by $1.5bn, led lower by the unwinding of the iron ore price spike. Metal ores (dominated by iron ore) fell by $1.2bn. Gold eased back, down $0.6bn, off a high base. Coal also moderated in the month, down $0.2bn. A partial offset was fuels, rebounding by $0.5bn.
Comments
The trade surplus surged to record highs in the first half of 2019, peaking at $7.9bn in the month of June. Export earnings were boosted by higher commodity prices, while import volumes were soft against the backdrop of weak domestic demand and with the lower dollar making imports more expensive.
Notably, temporary supply disruptions in Brazil led to a spike in the iron ore price. In August, the spot iron ore price pulled-back, from US$120/t to a still elevated $91/t.
