AU: Merchandise Trade

Wed Nov 01 19:30:00 CDT 2017

Consensus Actual Previous Revised
Level A$1.0B A$1.745B A$0.989B A$0.873B
Imports-M/M 0.2% 0.0% -0.5%
Exports-M/M 2.9% 0.5% 0.0%
Imports-Y/Y 5.5% 6.0% 6.0%
Exports-Y/Y 16.1% 16.9% 16.1%

Australia's trade surplus widened from a revised A$873 million in August to A$1.745 billion in September, well above the consensus forecast of A$1.0 billion. Australia's trade balance has been in surplus every month this year except for a small deficit in April.

In seasonally adjusted terms, the value of exports rose 2.9 percent on the month in September to around $32.96 billion, up from A$32.04 billion in August. This increase reflects stronger exports of non-rural goods (around 60 percent of total exports), services (around 20 percent), and non-monetary gold (around 5 percent). Exports of rural goods (around 15 percent) were little changed on the month. Year-on-year growth in total exports was steady in September at 16.1 percent in original terms.

Seasonally adjusted imports rose slightly to A$31.22 billion in September, up 0.2 percent from A$31.16 billion in August. Imports of capital goods and consumption goods increased on the month, offset by declines in imports of intermediate and other merchandise goods, non-monetary gold, and services. Total imports increased 5.5 percent on the year in original terms in September, down from an increase of 6.0 percent in August.

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.