December: +$3.7bn; prior: +$2.3bn. Imports -5.7%, Exports -1.6%.
In December, the trade surplus widened as imports pulled-back sharply following strength over recent months.
The December outcome of $3.7bn was an upside surprise, coming in well above expectations (market median $2.2bn and Westpac $2.8bn).
Imports fell by 5.7% in the month, with falls broadly based across the goods segments.
Exports disappointed, down 1.6%, with the $0.6bn decline more than explained by a plunge in the notoriously volatile gold shipments, contracting by $1.0bn.
There were also some upward revisions to history – the November surplus was upgraded to $2.3bn from $1.9bn.
For the December quarter, the surplus came in at $8.5bn, a $2.7bn improvement on a $5.8bn surplus for the September quarter.
Key to the improved trade position was an increase in the terms of trade, up by around 2.5% we estimate, rising on higher export prices for key commodities.
As to real net exports, upon inspection of the detail, we assess that this is likely to be a very small negative in the December quarter – in the order of -0.1ppt – rather than being a flat impact as we had originally anticipated.
