Trade deficit blows out

THE cost of Australia’s imports outstripped the value of exports by more than $ 600 million in November – the worst result for any month in more than a year.

Official figures reveal Australia suffered a trade deficit of $ 628 million during the month amid weaker coal and grain exports and an increase in imports.

Across all sectors, exports were flat for the month while imports grew in value by 1 per cent, the Australian Bureau of Statistics said yesterday.

The result came in far below the expectations of economists, who were broadly forecasting a surplus – where exports outstrip imports – of up to $ 800 million.

Even the most pessimistic forecasts, for a flat trade balance, proved to be off the mark.

It was the second monthly trade deficit in a row after the ABS also revised down Octo- ber’s narrow $ 105 million surplus to a $ 302 million deficit.

CommSec senior economist Ryan Felsman said the result was unexpected off the back of five straight surpluses through to September.

“Back- to- back trade deficits are surprising given decent increases in most of Australia’s commodity and services exports, and rising commodity prices amid a strengthening global economic backdrop,” Mr Felsman said.

Falling prices for key ex- ports contributed to the weak start to the fourth quarter, Westpac economist Simon Murray said. Iron ore prices fell in November, contributing to the weak trade balance, but have since rallied.

The value of the nation’s imports climbed by $ 467 million during the month, driven by an increase in purchases of capital goods, with aviation and telecommunications equipment leading the gains.

Exports were largely flat on a seasonally adjusted basis – just $ 141 million higher at $ 31.8 billion.

That came as a 2 per cent rise in “non- rural goods” such as iron ore helped offset a fall in cereals and grain, as well as a 23 per cent drop in notoriously volatile non- monetary gold exports.

A 26 per cent lift in metals exports was also partially offset by a 2 per cent drop off in coal, coke and briquettes, as China’s environmental focus weighed on thermal coal volumes.

Mr Murray said the total export earnings did rise during November, but the bill for overall imports more than covered that increase.

“Looking forward, positives remain in the LNG ( liquefied natural gas) sector as exports lift higher with additional capacity coming on stream and prices firm, while the Asian region continues to be a solid source of demand for services exports,” Mr Murray said.

The Australian dollar slipped to US78.53c after the figures were published.