Service export slump finds the floor

The collapse in Australia’s services export earnings abated in May, to languish at around 25 per cent below pre-COVID levels.

International visits to Australia have almost completely stopped. Picture: Supplied

The collapse in Australia’s services export earnings abated in May, to languish at around 25 per cent below pre-COVID levels.

The total monthly value of services exports lifted by 2 per cent, or $100 million, to $6.1bn in May, arresting three months of steep declines, seasonally adjusted figures from the Australian Bureau of Statistics showed.

In comparison, total services exports in January were worth $8.2bn.

China travel restrictions from February 1 and the eventual total ban on overseas travel implemented to halt the spread of the virus has smashed crucial export industries, such as tourism and education. By April there were 99.7 per cent fewer international visitors coming to Australia.

NAB economist Kaixin Owyong said travel service exports were “likely to remain around current levels as no new visitors enter the country, but most international students already in the country remain in Australia”.

More broadly, the latest ABS figures showed that Australia’s trade surplus lifted 2 per cent to just over $8bn, from $7.8bn a month before.

A $1.8bn, or 6 per cent, decline in imports in the month outstripped the $1.6bn, or 4 per cent, drop in exports.

Relative to the end of 2019, total exports were down by 11.8 per cent while imports have collapsed, down by 22.6 per cent.

Westpac economist Andrew Hanlan said Australia’s trade balance has been “boosted by the net impact of the pandemic”.

The country’s surplus climbed to a record $10.4bn in March, and has remained elevated since.

Mr Hanlan said “the key dynamic” was that “imports are trending lower as domestic demand contracts”.

“Goods exports, while not immune from the global recession, have been more resilient.”

The value of iron ore sales, in particular, has surged as high prices and still strong demand from China has buoyed the market.

Iron ore exports, in seasonally adjusted terms, eased by 1.8 per cent, while coal export earnings dropped by large 13 per cent.