The Australian Bureau of Statistics (ABS) has just released trade data for the month of June, with Australia posting a trade small surplus on the back of record exports to China.
In seasonally adjusted terms, the trade balance recorded a surplus of $9 million in June, a turnaround of $322m on the deficit in May. While exports fell by $99 million to $26,629 million, this was more than offset by a -$422 million reduction in imports to $26,619 million.
Australia’s two key exports – iron ore and coal – showed little movement over the month, but remain below recent highs (see below chart). Together, both commodities accounted for 39% of Australia’s merchandise exports over the month.
Exports to China hit a new record high of $7,494 million over the month, taking China’s share of Australia’s merchandise exports to a record 33%.
Given their status as Australia’s major producers of iron ore (Western Australia) and coal (Queensland), Western Australia and Queensland continued to dominate the nation’s exports in June (see below chart).
Western Australia was also primarily responsible for the turnaround in Australia’s trade balance, recording a 3% rise in exports and a -3% fall in imports over the month:
Finally, Australia’s services trade balance actually improved by $95 million over the month, driven by a reduction in tourism imports. Australian services exports also seem to have stabilised after a horror run since late-2008 on account of the high Australian dollar (see below charts).
Overall, it’s a solid result. Although Australia’s continued over-reliance on two export commodities – iron ore and coal – as well as one trading partner – China – is a concern given reports that the Chinese economy is slowing.
Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.
