Australia: Trade surplus shrank to $0.6bn in April - Westpac

In April, Australia’s trade surplus shrank to $0.6bn from $3.2bn as coal exports fell, -45%, -$2.5bn, due to weather disruptions explains Andrew Hanlan, Research Analyst at Westpac.

Key Quotes

“In April, Australia’s trade surplus narrowed sharply, to $0.6bn from $3.2bn in March This was weaker than expected (market median $2.0bn & Westpac $1.1bn).”

“It was all about coal exports and the temporary impact of weather disruptions.”

“Coal exports fell from $5.6bn to $3.1bn, a decline of $2.5bn, -45%. Expect this to be reversed in coming months as operations return to normal.”

“Total exports declined by 8.3% in April, a sharper than expected fall (Westpac f/c -7%) We had expected coal exports to drop by ‘only’ $1.5bn. In other export detail: gold declined by $0.4bn, off a high base; and metal ores were surprising resilient, -$72mn, despite the lower spot price pointing to the risk of a larger decline.”

“Imports fell by -0.6%, -$171mn, a little more resilient than our forecast of -1%. Fuel imports declined by $0.5bn, coming off a high base, meeting our expectations.”

“However, core imports (i.e. ex fuel, ex aircraft and ex gold) surprised to the upside, +1.6%. Import volumes have strengthened over the past year, including a rebound in capital goods.”

“This is a poor start to the June quarter. It follows a disappointing March quarter. In Q1, weather disruptions contributed to the 1.6% fall in export volumes, including a 4.6% decline in resource exports. Net exports subtracted 0.7ppts from Q1 GDP growth. Export shipments will rebound as operations return to normal, potentially setting the scene for a better Q3 result for both export volumes and net exports.”