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Trade performance best in 44 years: govt

Colin Brinsden, AAP Economics Correspondent
AAP
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The Australian economy is showing few signs of slowing down after 26 years of expansion.

The Australian economy is showing few signs of slowing down after 26 years of expansion.

The Australian economy is enjoying its best international trade performance in 44 years, although new figures show it managed only a tiny surplus in October.

The trade surplus shrank to just $105 million in October after a downwardly revised $1.6 billion surplus in September, the smallest result since April.

Economists had expected Thursday's data to show a surplus of $1.4 billion.

However, it was the 12th consecutive monthly surplus, something Treasurer Scott Morrison says hasn't occurred for 44 years.

"A strong trade performance, driven by an economy that is getting out there, winning business around the world, supported by our trade agreements, but particularly supported by our backing them in on their investment plans," he told parliament.

The small October surplus was the result of exports dropping by three per cent, while imports rose by two per cent.

Westpac senior economist Andrew Hanlan said it was a disappointing start to the December quarter trade balance.

Metal ores exports were the main negative, dented by a dip in the iron ore price which dipped below $US60 per tonne during October, although has subsequently rebounded touching $US72 per tonne this week.

ANZ commodities analyst Daniel Hynes expects the iron ore price to remain elevated in the short term because of supply issues in China.

"We expect prices to remain around $70 per tonne in the first half of 2018 before an expected slowdown in the Chinese economy weighs on the market," he said.

Commonwealth Bank senior economist John Peters expects solid trade surpluses over the coming quarters as LNG exports ramp up.

"We expect net exports, together with stronger household spending and non-residential construction, to drive GDP growth of three per cent through 2018," Mr Peters said.

Wednesday's economic growth figures for the September quarter showed exports had kept pace with imports, which benefited from a pick-up in business investment and associated capital imports.

As such, net exports - exports minus imports - made no contribution to growth.

Even so, the national accounts for the September quarter showed the economy overall entered the 27th year of uninterrupted growth at an annual growth rate of 2.8 per cent, the fastest pace in 15 months.