MB has a good record of predicting “unexpected” trade deficits and today is no exception. But one really does have to wonder why it’s so difficult for the MSM, not to mention other economists, to get trade data right. Here is the AFR’s take on today’s trade shocker:
Australia’s trade balance has unexpectedly swung to its largest deficit in more than four years after a massive plunge in exports of iron ore and coal.
The trade deficit blew out to $2.02 billion in August from $1.53 billion the month before, the Australian Bureau of Statistics saidon Wednesday.
The result is far worse than the $600 million deficit forecast by economists. The bureau also sharply revised the July deficit from $556 million.
Plunging iron ore and coal prices triggered an 7 per cent plunge in shipments of metal ores and minerals, the ABS said.
Splendid but wrong. Iron ore did not fall in the month. It was all coal and downwards revisions to the month before. The same weirdness is apparent at Business Spectator:
Australia’s trade deficit widened more than expected in August, according to data from the Australian Bureau of Statistics.
The data showed Australia’s trade deficit for the month of August rose 32 per cent to a seasonally adjusted $2.027 billion.
The result follows a revised deficit of $1.53 billion in July, from an initially reported $556 million.
CommSec analysts had expected the September deficit to widen to $700 million.
During August, exports fell three per cent, while imports eased one per cent, the ABS said.
HSBC chief economist Paul Bloxham said the data confirmed concerns about the price of bulk commodities, such as coal and iron ore, and their impact on Australian trade.
And The Australian:
WEAK export data confirms concerns about commodity prices and justifies the Reserve Bank of Australia’s latest interest rate cut, economists say.
Official figures released today showed Australia’s trade deficit widened in August, with the balance on goods and services at a deficit of $2.027 billion (seasonally adjusted), compared with a revised deficit of $1.53 billion in July.
Economists’ forecasts had centred on a deficit of $670 million in August. The Australian dollar fell after the larger than expected widening. At 12:00 AEST, the currency was trading at $US1.0232, down from $US1.0297 yesterday.
During August, exports fell 3 per cent, while imports dropped 1 per cent, the Australian Bureau of Statistics said.
HSBC chief economist Paul Bloxham said the data confirmed concerns about the price of bulk commodities, such as coal and iron ore, and their impact on Australian trade.
Anyways, iron ore rose $59 million on the month. I have noted before that the ABS trade figures lag the real world. I suspect some of the big revisions to past months are the result of the ABS catching up with prior spot price falls. Then there is also the three month delay that is in effect for at least half of total volumes because of sales via the quarterly contract pricing system.
Hence the iron ore crash, which transpired largely in July, will filter through over the next several months. It will therefore be no surprise at all, or should not be, that the trade deficit will continue to plunge.
What is a shock is that by year end we could have a current account deficit well north of 6%.
