The trade balance for June was a surprise shortfall on expected;
Westpac comments in the result:
Imports for June were stronger than anticipated, increasing by 2.4%
- strength was evident in: capital goods, +$733mn; consumption goods, +$194mn; and gold, +$238mn.
Exports declined in June, but not as sharply as expected
- Weakness was evident in metal ores, -$470mn, and coal, -$340mn, on weaker prices and volumes, broadly as anticipated
- The upside surprises were in the volatile gold segment, +$406mn, and fuels were little changed, whereas we expected a decline on lower volumes.
June quarter trade surplus narrowed to $2.8bn from $7.5bn for Q1
- Our preliminary calculations suggest that the narrowing of the trade surplus is due entirely to weaker commodity prices
- The terms of trade fell by an estimated 5%
- Real net exports have improved to have a neutral impact in Q2, we estimate
- This follows net exports making a sharp subtraction of 0.7ppts in Q1
- We were expecting net exports to be slightly positive in Q2 ... ahead of a sizeable positive contribution in Q3 as exports fully recover from earlier weather disruptions, including the impact of Cyclone Debbie
