From Westpac this afternoon comes analysis of today’s preliminary June quarter estimate of Australia’s international trade balance from the ABS, with Westpac estimating a 0.7% drag on GDP growth over the quarter – a sharp turnaround from the 1.4% positive contribution made in the March quarter:
Australia’s international trade balance was a deficit of $4.69bn in the June quarter, a turnaround of $7.26bn on the revised March quarter surplus of $2.57bn.
These figures are broadly in line with the monthly trade release, which reported a $7.74bn deterioration between Q1 and Q2.
Export earnings declined by 7% in Q2, with goods down 9%, partially offset by a 1.4% rise in services.
The import bill increased by 1.2%, with goods up 1.0% and services increasing by 2.0%.
Total import volumes of goods and services increased by an estimated 3.7% in Q2, upgraded a fraction from our earlier estimate of 3.5%. Goods volumes rose by 3.7%, the ABS advise, and we expect a matching increase in services. Capital goods imports and services both rebounded in the June quarter.
Export volumes were broadly flat in Q2, on our estimates. This consolidation follows a strong rise in Q1, when iron ore and coal shipments were boosted by fewer weather disruptions than normal for a March quarter.
Net exports will subtract an estimated 0.7ppts off Q2 GDP, partially reversing a 1.4ppts positive contribution in Q1.
