Australia’s trade deficit missed expectations, continues to widen in June

Australia's seasonally adjusted trade deficit missed expectations and widened sharply in June to A$3.2 billion, from A$2.42 billion in May, the Australian Bureau of Statistics said Tuesday. The deficit was much wider than analysts' expectations of a deficit of A$2.0 billion.

The value of exports fell 1.0 percent in June from May, while the value of imports rose 2.0 percent. A decline in the value of resource exports (down 2.7 percent m/m) was the main factor behind the deterioration in the trade balance in June. Non-monetary gold exports (which are very volatile) were the prime drivers, dropping 15.5 percent m/m.

The 2 percent rise in imports largely reflected stronger imports of consumption goods (+7.4 percent m/m ). Excluding volatile items total goods imports jumped 3.6 percent m/m. The rise in imports may be good news for the domestic economy as a whole as it may reflect higher households’ appetite for consumption.

According to the ABS, the preliminary Q2 trade deficit was AUD7.98bn, slightly less than the AUD8.66bn deficit in the previous quarter.