Australian Oct trade position was materially weaker than expected - Westpac

Andrew Hanlan at Westpac notes his afterthoughts following the release of Australian trade deficit figures, which disappointed widening by $0.2bn to $1.5bn. Exports came in at +1.4%, while imports at+2.3%.

Key Highlights:

For October, the trade position was materially weaker than expected.

The anticipated improvement failed to materialise in October, with the deficit actually widening a little.

The October deficit of $1.5bn follows a $1.3bn deficit in September and compares unfavourably to expectations (mkt median -$0.6bn and Westpac -$0.2bn)

Exports disappointed and imports surprised to the high side.

Exports earnings increased by 1.4%, +$390mn, vs a forecast 4.2%

Coal lifted but only by $240mn vs a forecast $700mn with upside risk

Metal ores dipped by almost $100mn despite partial information suggesting that volumes rose

Fuels, including LNG, rose $230mn, centred on rising volumes as additional LNG capacity comes on stream.

Imports increased by 2.3%, +$660mn, vs a forecast 0.5%.

Capital goods jumped almost $0.5bn, despite the ongoing decline in business investment.

Gains were also evident in services, +$135n, which have been strengthening of late, as well as consumption and intermediate goods.

Looking ahead, the official data is yet to reflect the surge in coal prices. As this is belatedly feed into the export figures, along with rising LNG volumes, the trade position is likely to move into surplus.