Daily Commentary BY THE CURVE TEAM –

Trade Surplus Eases

8th of June, 2018

With this week’s growth data showing Australia’s exports underpinned the economy’s expansion in the first quarter, yesterday’s trade figures were going to be closely watched.

After a large turnaround in the first quarter which saw a trade surplus of $4.3bln add 0.5% to the economy in Q1, the trade balance narrowed in April. The trade balance eased from an upwardly revised $1.7bln in March to $1bln in April, largely driven by a fall in exports.

Falling commodity exports, predominately coal,  saw exports decline 2.2% over the month. The decline was driven by both lower volumes and prices. Imports on the other hand were largely unchanged.

While the trade balance is well in surplus, if we see similar results over the next two months, net exports will likely be less supportive of growth in the second quarter.

On commodity prices there continues to be elevated volatility, especially in oil markets, as competing forces and uncertainty in a number of regions are driving large swings in prices. Issues in Venezuela and uncertainty over the upcoming OPEC meeting drove prices higher overnight after they had been on the back foot for the best part of the last week.

It should be a quiet day ahead before the G7 kicks off which will give us plenty to talk about on the other side of the weekend.

David Flanagan

Director - Interest Rate Markets