Australia | Sep 04 2008
By Chris Shaw
Given the recent raft of important economic data in terms of its implications for monetary policy, today’s Australian trade data for July was almost an anti-climax, though it did show a deficit when the market had been forecasting a small surplus.
The trade balance for the month was -$717 million, which was well outside market consensus of +$50 million. Westpac was one of the closest with its estimates, forecasting a -$350 million outcome compared to Commonwealth Bank’s forecast of a $100 million surplus. The numbers show total exports were down 0.8% for the month, while total imports rose 3.9%.
As TD Securities senior strategist Joshua Williamson notes, the negative balance was the result of a fall in commodity exports at the same time as imports rose on the back of a significantly higher fuel bill. In his view, the figure shows export volume increases are still struggling to gain traction, though an improvement can be expected in August.
ANZ economist Dr Alex Joiner agrees, suggesting the weaker Australian dollar should help claw back some of the turnaround in trade over the next few months as it will make exports more attractive. As well, Commonwealth Bank saw the data as containing a number of one-offs, meaning a return to surplus is expected in coming months.
While the Aussie dollar sold lower on the figures, the data is considered unlikely to have any impact on monetary policy. Williamson notes this is largely because of its volatility month to month.