Australia: Trade surplus back on track - TDS

Australia’s January trade balance rebounded from a -$A1.15b deficit to a +$A1.06b surplus and market consensus was +$A160m while TD was near top of the market at +$A700m, points out the research team at TDS.

Key Quotes

“Exports rose +4.3%/m while imports fell -2.4%/m, a favourable combination for a trade report. Behind the scenes, LNG exports have almost doubled in the last two years as LNG plants come onstream, while iron ore, coal and tourism bring in similar export dollars these days.”

“With so much going on re potential trade wars and the trickle-down implications for commodities, the AUD didn't especially benefit from this positive trade report, although it remains elevated at $US0.783.”

“Using the tools that shaped our January forecast, i.e. the Chinese trade report, we expect a smaller trade surplus for February, closer to +$A450m. The Chinese trade report today claimed that imports from Australia eased while exports to Australia slumped due to the Lunar New Year holiday and so imports are expected to slide again in February.”

“After a dismal Dec qtr for trade, the current account deficit could shrink from -3.1% to -2½% in Q1, while net exports could be more neutral for GDP rather than the prior -½% detraction.”