Net exports to be positive factor for Australias Q3 growth

In July, Australia's trade deficit was a still sizeable $2.5bn, narrowing some $0.6bn from a $3.1bn deficit in June. The July outcome exceeded expectations  of  -$3.1bn, says Westpac. Exports surprised to the upside, with earnings recovering for a third consecutive month, up 2.3%. The detail reveals that a jump in gold export shipments, to the highest level in three years, was the source of strength in the month. Coal and iron ore remained under pressure, with lower export receipts for both in July.

Imports were flat in the month, meeting expectations. A rebound in capital goods was offset by a drop in fuel. The July trade figure represents a positive start to the September quarter. A $2.5bn deficit is down from a June quarter average of $3.2bn per month. For Q3, net exports are expected to be a positive for growth, which follows a sizeable subtraction of -0.6ppts in Q2 as export volumes slipped, says Westpac.