Australia Trade Surplus Beats Forecasts in July as Exports Fall

Australia’s trade surplus exceeded market expectations in July, although it narrowed from the previous month as exports declined faster than imports, according to data released Thursday by the Australian Bureau of Statistics (ABS).

The country recorded a trade surplus of A$1.92 billion in July, beating forecasts of A$1.50 billion. However, the figure was below June’s A$2.34 billion surplus.

Australian exports fell 3.3% month-on-month after surging 9.6% in June, bringing their total value to A$46.26 billion. Imports declined 2.5% to A$44.34 billion, following a modest 0.2% decrease a month earlier.

The drop in exports was largely driven by weaker shipments of non-monetary gold and coal. Gold exports plunged 26.1%, while coal, coke and briquettes fell 4.3%. Shipments of metal ores and minerals decreased 1.6%.

Other export categories performed more strongly. Other mineral fuels increased 9.6%, while LNG export volumes climbed 8.5%. Rural exports gained 5.8%, supported by a 19% jump in cereal grains and preparations.

On the import side, intermediate and other merchandise goods declined 7.8%, while fuel and lubricant imports dropped 12.3%. These decreases outweighed higher imports of capital and consumption goods.

The latest Australia trade data follow stronger-than-expected second-quarter GDP figures. The economy expanded 0.4% quarter-on-quarter and 2.1% year-on-year, surpassing forecasts for growth of 0.3% and 1.8%, respectively.

Resilient economic growth has strengthened expectations that the Reserve Bank of Australia could raise interest rates again. Markets recently priced in a 72% probability of a September rate hike. The RBA has increased its cash rate three times this year to 4.35%, while keeping rates unchanged at its June and August meetings.

The Australian dollar showed little immediate reaction to the trade figures, with the AUD/USD exchange rate broadly unchanged.