AU: Merchandise Trade

Wed May 03 20:30:00 CDT 2017

Consensus Actual Previous Revised
Level A$3.5B A$3.1B A$3.6B A$3.7B
Imports-M/M 4.6% -5.3% -4.7%
Exports-M/M 2.4% 1.5% 0.1%
Imports-Y/Y 10.0% -1.2% -0.6%
Exports-Y/Y 28.8% 24.8% 24.6%

Australia's trade surplus narrowed to A$3.1 billion in March from A$3.7 billion in February (revised from A$3.6 billion), below the consensus forecast of A$3.3 billion. The trade balance has now been in surplus for five consecutive months after nearly three years in deficit, helped by strong global commodity prices.

In seasonally adjusted terms, the value of exports rose 2.4 percent on the month in March to around A$33.3 billion, up from A$32.6 billion in February. This increase was largely driven by a sharp increase in exports of non-monetary gold (around 6 percent of the total). Exports of rural goods (around 12 percent of the total) also recorded a solid gain in March, augmented by a modest increase in exports of services (19 percent of the total). Exports of non-rural goods (around 63 percent of the total) were flat on the month.

Year-on-year growth in total exports picked up from 24.6 percent in February to 28.8 percent in March in original terms, and slowed from 29.7 percent to 29.2 percent in seasonally adjusted terms.

Seasonally adjusted imports increased by 4.6 percent on the month in arch to A$30.2 billion, up from A$28.9 billion in February. This gain in headline imports was mainly driven by stronger imports of consumption goods and intermediate and other merchandise goods, offsetting lower imports of capital goods and flat services imports.

Total imports rose 10.0 percent on the year in original terms in March, up from a decline of 0.6 percent in February, while seasonally adjusted year-on-year growth in import accelerated from 2.5 percent to 7.3 percent.

The 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.