Trade back in black on iron ore spike

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By Leith van Onselen

The Australian Bureau of Statistics (ABS) has just released trade data for the month of March, with Australia recording a surprise seasonally-adjusted trade surplus of $307 million. Analysts had expected the trade balance to come in flat.

It was the first monthly surplus in 15 months (see below chart).

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In seasonally adjusted terms, exports rose rose $148m (1%) to $25,746m. The increase in exports was assisted by a $270m (1%) fall in imports to $25,493m, mostly on the back of lower capital goods (-$574m).

Australia’s two major export commodities – iron ore (26% share) and coal (13% share) – rose by $834 million and $37 million respectively. Gas exports (6% share) also rose (+$258 million), whereas Australia’s fourth biggest export – gold (5% share) – fell by -$135 million over the month (see below chart).

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Exports to China rose by $1,049 million over the month to a record $7,402 million, with its share of total exports also hitting a record high of 34%. Exports to the three other major markets – Japan (+$451 million), Korea ($283 million) and India (+$9 million) – also rose (see below chart).

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Western Australia continues to dominate the nation’s exports. It alone accounted for 50% of Australia’s merchandise exports in March, with exports rising by 17% over the month. Exports from Queensland also rose by 9%, after crashing in January (see below chart).

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Western Australia also continues to be the only state with a meaningful trade surplus, although South Australia is also pulling its weight:

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Finally, Australia’s services trade balance improved in March (+$48 million), and continues to recover after a horror run since late-2008 on account of the high Australian dollar (see below charts).

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Overall, the turnaround in the trade balance augers well for the upcoming March quarter GDP results, with net exports expected to show a positive contribution.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.