AU: Merchandise Trade

Wed Jan 06 18:30:00 CST 2016

Consensus Actual Previous Revised
Level A$-3.0B A$-2.9B A$-3.3B A$-3.2B
Imports-M/M -0.6% 0.3% 0.5%
Imports-Y/Y 5.4% 6.5% 6.1%
Exports-M/M 0.6% -3.0% -3.8%
Exports-Y/Y -1.1% -1.3% -1.4%

November trade deficit narrowed to A$2.906 billion from a revised A$3.247 billion. It was the 20th monthly trade deficit in a row as the resource-dependent nation suffers from a steep decline in key commodity prices, while a weaker Australian dollar pushes up the costs of some imports.

Exports declined 1.1 percent on the year while imports were up 5.4 percent from a year ago. Intermediate and other merchandise goods imports were down 2 percent while capital goods imports were up 1 percent and consumption goods were up 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.