Australia: Trade surplus remains at a near record highs – Westpac

Andrew Hanlan, analyst at Westpac, points out that in July, Australia's trade surplus remained at a near record highs - albeit down from the June peak as the surplus narrowed to $7.3bn, down from the $8.0bn record result for June.

Key Quotes

“This was about mid-way between market expectations and our view (market median $7.0bn and Westpac $7.8bn).”

“Imports were particularly volatile over the period of June and July.”

“The import bill slumped by 3.5%, $1.3bn, in the final month of the 2018/19 financial year. That was almost fully reversed in July, rebounding by $1.0bn, 2.9%. We anticipated a sizeable reversal, albeit not quite this large.”

“Export earnings moved higher still in July, increasing by +0.6% (+$0.3bn). Over the year, exports are up by almost 16%.”

“Over the next couple of months, the trade surplus is likely to be trimmed somewhat. The spike in the iron ore price began to be unwound in August - with spot prices pulling back from around US$120/t to the $85 to $90 mark.”