Commodity prices, dollar impact trade data

A persistently high Australian dollar and weaker commodity prices have kept Australia's trade data in deficit for the ninth consecutive month, with falls in both exports and imports.

Official data released on Monday showed Australia's balance on goods and services narrowed to $1.456 billion in September seasonally adjusted, compared with a revised deficit of $1.876 billion in August.

The result beat economists' forecasts of $1.5 billion deficit in September.

Total exports fell one per cent during the month to $25.3 million, driven by an 11 per cent drop in iron ore sales and a 12 per cent decline in overseas sales of wheat.

Partly offsetting that weakness was a 11 per cent rise in coal exports and a 20 per cent leap in gold sales to overseas customers.

Total imports fell two per cent, largely as a result of an eight per cent drop in plant and equipment brought into the country and a six per cent fall in consumer goods.

Commonwealth Bank senior economist John Peters said while the result was a solid improvement on August's deficit, it was unsurprising given lower commodity prices and a strong local dollar.

"In general terms, the latest data confirms earlier monthly trade data that signalled whilst the price of iron ore and coal have dropped sharply over 2012, export volumes of these two commodities have continued to trend higher as major projects come on stream in wake of the he mining investment boom of recent years," he said.

However, export volumes could pick up in the coming months, as the mining sector begins to bring large projects online.

"Overall in the months and quarters ahead, we see bulk commodity export volumes picking up further momentum after setbacks earlier in 2012, revolving around weather related events and industrial disputes, and when the Chinese economy and the economies of other major export destinations in developing Asia, ultimately pick up momentum again in 2013 and beyond."

"As investments undertaken in the mining boom come online, further increases in export volumes are likely to follow in the next year or two, boosting Australia's export income, and economic growth."

St George economist Janu Chan said that while uncertainty surrounded Australia's trade position, there were some encouraging signs including a rebound in iron ore prices and signs that growth was stabilising in China.

"That being said, we continue to expect the high Australian dollar to impact negatively on Australia's trade position, suggesting that continued trade deficits are likely over the next few months," she said.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9280-0.0007-0.08%
    AUDUSD=X
    0.5525-0.001-0.17%
    AUDGBP=X
    0.6709-0.0012-0.18%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg