Australia’s trade surplus shatters record in June, creates possibility for current account surplus in Q3

Australia’s monthly trade balance surged to a new high in June, coming in at a AUD8,036m surplus, the highest on record by some margin. Underlying this was a 1.4 percent m/m rise in exports and a 3.6 percent m/m fall in imports. This surplus was an export and import goods story, with service exports and imports broadly unchanged for the month.

Resource exports continued to grow, up 2.6 percent m/m in June. Metal ores and minerals, which were up 4.9 percent in the month, are the primary drivers of this increase. Iron ore prices are expected to remain elevated, helping maintain Australia’s strong surplus over the coming months, according to the latest report from ANZ Research.

Rural goods sales were lower: cereals down 35.7 percent, meat exports up 8.0 percent and wool down 18.6 percent.

Capital goods imports were down 4.7 percent m/m, reflecting falls across most categories. Civil aircraft imports were down 45.8 percent m/m, following the surge of 67.1 percent in the previous month. Intermediate goods imports were broadly unchanged.

With oil prices down throughout most of June, fuel imports fell 10.8 percent. Consumption goods imports were down 5.1 percent m/m, reflecting declines across most categories.

"Looking forward, further record surpluses are possible if resource exports hold up and imports continue to fall. Some moderation seems more likely, however. This record shattering surplus creates a material possibility for a current account surplus for the June quarter. This would be the first current account surplus since the 1970s," ANZ Research further commented in the report.