Trade deficit grows on rising imports

Australia's trade deficit grew in November to reach its highest level since March 2008, due to an increase in imports, particularly of consumer goods.

Bureau of Statistics figures show the deficit widened by 8 per cent to $2.64 billion in November, seasonally adjusted.

A 1 per cent rise in exports to $24.7 billion was more than offset by a 2 per cent rise in imports to $27.3 billion.

Rural goods exports were up around 2 per cent, with wool and sheepskin exports up 10 per cent.

Exports of non-rural goods also rose 2 per cent, with metal ore and mineral exports up 6 per cent, largely reflecting a recovery in iron ore prices, and the value of machinery shipped overseas rising 17 per cent.

Tourism also posted a rise, with visitors to Australia worth $2.88 billion in November, up 2 per cent on the previous month.

There were falls in the value of coal and metal (excluding gold) exports.

The rise in imports was mainly driven by consumer goods, with a 3 per cent rise to $5.81 billion.

There was also a 9.5 per cent rise in imports of non-industrial transport equipment (mostly passenger cars), reflecting a record year for new car sales in 2012.

Capital goods imports were broadly flat, while imports of intermediate goods (which includes fuels, chemicals and industrial supplies) were up 5 per cent.

Outbound tourism from Australia was worth $2.9 billion, completely offsetting the value of tourists coming in.

Iron ore rebound NAB's chief market economist, Rob Henderson, says while there was some good news, with the volume of exports increasing, the figures suggest economic growth was weak in the final quarter of last year.

"We did see some improvement in exports by volume, of coking coal and semi-soft coal, but on the other hand the overall trade deficit has deteriorated, which means we're importing more than we're exporting, and that tends to reduce the prospects for GDP [economic growth] in the fourth quarter of the year," he said.

Senior economist at the ANZ Justin Fabo says a number of statistical revisions by the ABS led to a bigger than expected deficit, with October's deficit being revised up to $2.4 billion from an initial estimate of $2.1 billion.

"They're having some difficulty measuring the LNG imports that are actually occurring overseas, so they're having a tough time in real time actually measuring those imports leading to these big revisions," he said.

"But, on the export side, take out gold which is very volatile month to month and the exports were up solidly, and part of that was because of reasonably strong iron ore exports." Economists say the value of those iron ore exports is likely to have increased again in December, and keep rising early this year, due to continued gains in the iron ore price and rising export volumes.

Iron ore spot prices in China have recovered from lows below $US90 a tonne in early September to current levels above $US150 a tonne, while ore shipments to China from Western Australia's Port Hedland jumped 25 per cent last month compared to November.

Market Data

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    AUDGBP=X
    0.6753+0.0001+0.02%
    AUDEUR=X
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