Monthly trade shortfall biggest in more than a year

The Australian Bureau of Statistics yesterday said the seasonally adjusted trade deficit was $628m in November.

The Australian Bureau of Statistics yesterday said the seasonally adjusted trade deficit was $628 million in November, the biggest shortfall in more than a year, as it significantly revised down the October figure to a deficit of $300m.

“It was a big miss,” said National Australia Bank economist James Glenn, “and yet another sign that trade will struggle to add to GDP growth in the final quarter of 2017”.

The November data were worse than the market had expected. Before the release, analysts had forecast a surplus of $550m.

“Even if the trade balance did recover in December, the weak start to the quarter means that net trade probably made a negative contribution to GDP growth in the fourth quarter,” Capital Economics’ Kate Hickie said.

Exports were largely flat in November — $141m higher at $31.8 billion — as a 2 per cent rise in non-rural goods such as iron ore, metallurgical coal and thermal coal helped offset a 23 per cent fall in gold exports. Non-monetary gold, as it’s called, is a volatile item.

Meanwhile, imports were up 1 per cent at $32.5bn.

“These back-to-back trade ­deficits posted in October and ­November follow 11 monthly surpluses on the trot, putting a bit of a dent in the idea that the trade sector is still in ruddy good health,” Commonwealth Bank economist John Peters said.

Mr Peters still expected strong demand for LNG exports to underpin the trade figures this year, noting more LNG projects would come on line.

“The future still looks relatively positive, with likely continuing strong demand for Australian iron ore and coal by China” he said.

Ms Hickie added: “There is a chance that coal exports may have increased in December given that the Chinese government loosened some of the restrictions on coal-fired power plants in December because of the cold weather.”

Australians imported more than $580m worth of toys, books and leisure goods in November — a record high — and $1.48bn worth of shoes and clothes. Service exports, which make up about a quarter of all exports, were helped by a 3 per cent rise in tourism earnings, which came to $5.2bn.

The trade balance measures the monthly value of the flow of goods and services traded with the rest of the world. Trade deficits, which are the part of the current account deficit that excludes international investment flows, can be funded by selling assets to or borrowing from foreigners.

Australia’s foreign debt, equivalent to more than 60 per cent of GDP, is the highest in the developed world.