November merchandise trade deficit was A$925 million, up from a downwardly revised deficit of A$877 million in October. Exports were up 0.6 percent on the month but were 1.3 percent lower from the same month a year ago. Imports were up 0.7 percent and up 1.4 percent on the year.
Non-rural exports were up 3 percent while rural exports gained 6 percent. Non-monetary gold dropped 38 percent. The main component contributing to the rise in seasonally adjusted estimates for rural goods was cereal grains and cereal preparations. The main components contributing to the rise in seasonally adjusted estimates of non-rural exports were other mineral fuels and machinery.
Intermediate and other merchandise goods imports were up 2 percent as did consumption goods. Non-monetary gold dropped 27 percent. A main component contributing to the rise in seasonally adjusted estimates was non-industrial transport equipment. Also contributing was fuels and lubricants.
Merchandise trade balance measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the Australian dollar in the foreign exchange market. Imports indicate demand for foreign goods while exports show the demand for Australian goods in its major export market China and elsewhere. The currency can be sensitive to changes in the trade balance since a trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. A word of caution -- the data are subject to large monthly revisions. Therefore, it can be misleading to form opinions on the basis of one month's data.