Australia's trade deficit came in at $2.9bn for November, a $341mn improvement on a $3.2bn deficit for October (mkt median -$3.0bn). Imports edged 0.6% lower, down $182mn, as anticipated. Export earnings surprised, increasing by 0.6%, up $160mn.
"We had expected export earnings to weaken, led lower by falling global commodity prices. However, we would not take too much comfort from the November result", says Westpac Research.
The upside surprise was entirely explained by a spike in "other" rural goods. Rural goods jumped 15% in November, up $554mn - due to "other" rural goods, which includes dairy, leaping 36%, +$584mn. Outside of rural goods, exports weakened in November, declining by $394mn.
For the December quarter to date, the average monthly trade deficit is tracking at $3.1bn, a deterioration from a $2.3bn average for Q3, which was an improvement on a $3.6bn average for Q2. A further decline in the terms of trade is evident in the December quarter, while real net exports are expected to add to GDP growth for Q4, albeit by less than the chunky 1.5ppts addition recorded in Q3.
