AU: Merchandise Trade

Wed Oct 04 19:30:00 CDT 2017

Consensus Actual Previous Revised
Level A$0.800B A$0.989B A$0.46B A$0.808B
Imports-M/M 0.0% -0.9% -1.0%
Exports-M/M 0.5% -2.2% -1.5%
Imports-Y/Y 6.0% 7.1% 7.2%
Exports-Y/Y 16.9% 15.6% 17.4%

Australia's trade surplus widened from A$808 million in July to A$989 million in August, above the consensus forecast of A$800 million.

In seasonally adjusted terms, the value of exports rose 0.5 percent on the month in August to around $32.23 billion, up from A$32.06 billion in July. This increase reflects stronger exports of non-rural goods (around 60 percent of total exports) and services (around 20 percent), partly offset by declines in exports of rural goods (around 15 percent) and non-monetary gold (around 5 percent). Year-on-year growth in total exports slowed from 17.4 percent in July to 16.9 percent in August in original terms.

Seasonally adjusted imports were flat on the month in August at A$31.24 billion, little changed from A$31.26 billion in July. Imports of intermediate and other merchandise goods and services imports rose on the month, offset by declines in imports of capital goods, consumption goods and non-monetary gold. Total imports increased 6.0 percent on the year in original terms in August, down from an increase of 7.2 percent in July.

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.