The Australian Bureau of Statistics (ABS) has released export and import prices for the December quarter, which portends a big lift in Australia’s terms-of-trade when the national accounts are released in early March.
Key statistics
Export price index rose 5.5% this quarter and 0.3% through the year.
Import price index fell 1.0% this quarter and 7.3% through the year.
The Australian dollar appreciated against the United States dollar.
The exchange rate had a downward effect on export and import prices this quarter.
Export price index
The Export price index rose 5.5% this quarter. The main contributors to the rise were:
Metalliferous ores and metal scrap (+11.5%), driven by the demand for iron ore from China.
Non-ferrous metals (+9.6%), due to increased global manufacturing demand.
Petroleum, petroleum products and related materials (+5.6%), reflecting the slow recovery in oil demand post COVID-19.
Gas, natural and manufactured (+2.1%), due to the oil-linked contracts capturing the beginning of the recovery in oil prices.
Coal, coke and briquettes (+0.9%), reflecting the demand for thermal coal during the northern hemisphere winter.
The main offsetting contributors were:
Gold, non-monetary (-4.0%), due to easing global uncertainty.
Meat and meat preparations (-2.4%), driven by competition in the global market and appreciation of the Australian dollar…
Dividing export prices by import prices gives a useful estimate for Australia’s terms-of-trade. As shown below, the terms-of-trade is facing a circa 6.6% rise in the December quarter, which should add to both national income and nominal GDP:
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This is supported by the RBA’s commodity price index, which reported an 11.3% jump in commodity prices over the December quarter:
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.
