Trade deficit widens in November

Australia's trade balanced remained in deficit for the 10th straight month in November but is expected to stabilise in the period ahead amid strong imports and exports growth, economists say.

The Australian Bureau of Statistics said on Tuesday the trade deficit was $2.637 billion in November.

While the result was more than economists' forecasts of a $2.3 billion deficit, the previous month's deficit was revised upwards to $2.443 billion.

Exports rose one per cent and imports were two per cent higher in the month, the ABS said.

Australia's trade deficit has grown from $242 million in February 2012 to the $2.637 billion November figure.

ANZ economist Andrew McManus said he expected the trade balance to stabilise over the next few months, given iron ore prices and coal prices appeared to have settled somewhat.

"Remember this is November data, we do have a bit of an idea of what iron ore prices have done now," Mr McManus said on Tuesday.

"Given where commodities prices have gone over the past couple of months, you are going to have continued reasonably strong imports at least through the majority of 2013.

"Putting all that together, when you get reasonably strong imports growth and you have reasonably strong exports, it is generally a pretty good sign for the economy."

Mr McManus said the revisions to previous months were most likely due to the timing of LNG projects payments for not just capital goods, but also engineering services being spread out over a number of months.

Imports of consumption goods rose from $5.65 billion in October to $5.81 billion in November, which Mr McManus said was an encouraging sign for the retail sector.

"We don't import stuff unless we are buying it in the shops," Mr McManus said.

"It is a sign that people are still spending."

The Australian dollar fell slightly in response to the data.

At 1145 AEDT, the Australian dollar was trading at 105.05 US cents, down from 105.13 US cents shortly before the data was published at 1130 AEDT.

JP Morgan economist Ben Jarman said the November figure was the largest trade deficit since March 2008.

He said lower commodity prices had weighed on exports while imports remained strong in the month.

"Essentially everything is adding up to a very soft number," he said.

Mr Jarman said the recent rise in commodity prices, particularly in ore prices, had yet to be reflected in the trade figures.

He said the improvement in prices would see the deficit narrow over the coming months.

"The numbers will get better as we go through the first half of 2013 but we still think the trade balance will stay in deficit."

He said the Australian dollar, which remained high despite the lower commodity prices, also contributed to the large deficit.

"It sort of highlights the fact that the high Aussie dollar is a bit of a drag on national income," he said.

"Because we've had the drag from commodity prices without any offsetting help from the Aussie, that has really exacerbated the weakness."

Market Data

  • Currencies
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    NamePriceChange% Chg
    0.9276-0.0011-0.12%
    AUDUSD=X
    0.5526-0.0009-0.15%
    AUDGBP=X
    0.6713-0.0008-0.12%
    AUDEUR=X
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