AU: Merchandise Trade

Wed Sep 02 20:30:00 CDT 2015

Consensus Actual Previous Revised
Level A$-3.2B A$-2.5B A$-2.9B A$-3.05B
Imports-M/M 0.0% 0.1% 3.9% 4.6%
Exports-M/M -1.0% 2.3% 3.3% 3.1%
Imports-Y/Y 5.3% 4.9% 4.8%
Exports-Y/Y 0.3% 0.7% 0.6%

July's merchandise trade deficit narrowed to A$2.48 billion from a deficit of A$3.05 billion in June. Exports were up 2.3 percent and 0.3 percent on the year while imports inched up 0.1 percent and 5.3 percent from a year ago.

The value of iron ore, the country's top export, was A$4.097 billion in July, down from A$4.542 billion in June, but revenue from gold, natural gas, wheat, copper, nickel, lead and silver saw increases. Net exports under merchanting were up A$2 million. Rural goods exports dropped A$76 million while nonrural goods exports were down A$9 million.

An increase in capital-goods imports was offset by a decline in intermediate goods. Capital-goods exports rose as a result of exports of civil aircraft and confidentialized items. Intermediate goods imports fell owing to 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.