Australia posts its 54 successive monthly trade surplus
Australia’s trade surplus hit a record $17.7 billion in June, coming in above consensus forecasts of $14 billion.
According to the Australian Bureau of Statistics (ABS), the $2.6 billion month-on-month gain came on the back of strong exports of grains, meat, iron ore, metals and gold.
“Australia has now posted 54 successive monthly trade surpluses,” observes Craig James, chief economist at CommSec. “Exports are up 41.4 per cent on a year ago.”
The rolling annual surplus rose from $130.7 billion in the year to May to a record $136.4 billion in the year to June, he says.
Australia's annual exports to China rose by 2.7 per cent to $170.5 billion in June but are still well down from the record $179.5 billion of exports in the year to November 2021.
Australia's annual imports from China rose by 16.4 per cent to a record $101.3 billion in the year to June.
But while China is still Australia’s dominant trading partner, here comes India.
According to Craig, the trade surplus with India now stands at a record $16.7 billion.
“Exports to India have doubled over the year with imports up over 60 per cent,” he says.
“Coal, gold and copper dominate exports to India. Refined fuel, medicine, pearls, textiles and other jewellery dominate imports.”
However, while Australia’s exports and imports are enjoying solid growth rates, Craig says they must be viewed against the background of rising prices.
“The latest data show that export prices are up 38.7 per cent on a year ago. Import prices are up 22.1 per cent on the year.
“We won’t know the exact composition of volume and price movements until 6 September. But taking into account current prices, export volumes are currently up 6-8 per cent over the year and import volumes are up around 3-5 per cent. As the Reserve Bank board notes, the Australian economy is operating strongly.”
ANZ economists Madeline Dunk and David Plank believe that things are near their peak.
“Australia’s golden run of trade windfalls has been underpinned by sales of coal, iron ore and LNG. But our biggest buyer, China, has been trying to limit its reliance on coal imports, and its steel output is expected to weaken this year.
“Given the fact that commodity prices appear to have peaked, we think the trade surplus will soon start to slide.”