September merchandise trade deficit was A$2.3 billion, down from a revised A$2.7 billion in August. Expectations were for an A$2.9 billion deficit. Exports were up 1.7 percent on the month after barely increasing 0.2 percent last time. Imports jumped 3.4 percent after retreating 0.7 percent in August. On the year, exports and imports were up 4.7 percent and 5.3 percent respectively.
Exports of rural goods were up 1.0 percent mainly due to a 2 percent increase in other rural. Nonrural exports were up 4 percent. Contributing to the increase were metal ores & minerals (up 8 percent), metals excluding non-monetary gold (up 31 percent) and other nonrural (up 19 percent). Partly offsetting these increases was coal, coke and briquettes (down 9 percent).
Imports of consumption goods were up 3 percent, non-monetary gold rose 47 percent and capital goods gained 2 percent. Intermediate and other merchandise goods slipped 1 percent.
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.