AU: Merchandise Trade

August 1, 2016 08:30 CDT

Consensus Actual Previous Revised
Level A$-1.9B A$-3.19B A$-2.2B A$-2.4B
Imports-M/M 2.0% 2.2% 2.4%
Imports-Y/Y -2.3% -1.1% -1.3%
Exports-M/M -0.8% 0.7% 0.3%
Exports-Y/Y -0.9% 3.1% 2.3%

The June trade balance deteriorated to a deficit of A$3.2 billion from a revised May deficit of A$2.4 billion. Exports were down 0.8 percent on the month and 0.9 percent from a year ago. Imports were up 2.0 percent in June and were down 2.3 percent from a year ago.

Rural goods exports were up 1 percent while non-rural goods rose A$20 million. The main components contributing to the rise were cereal grains & cereal preparations and meat & meat preparations.

Exports of non-rural goods rose A$20 million to A$15,191 million. The main components contributing to the rise in seasonally adjusted estimates were metal ores and minerals, metals (excl. non-monetary gold), machinery and other mineral fuels. Partly offsetting the increases were coal, coke & briquettes and other non-rural goods.

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.