Daily Commentary BY THE CURVE TEAM –

Trade Balance Surprises Again

8th of January, 2021

Trade balance figures for November once again surprised after unexpected October data.

October’s trade balance surprisingly showed a boost of the trade surplus to $7.5 billion off the back of falling imports and rising exports. This has since been revised down to a $6.6 billion surplus for October.

November’s figures showed a surplus of $5 billion, as imports surged 10% and exports rose 3%. This was against an expected rise in imports of 2% and a fall in exports of 3%.

The big increase in imports is likely off the back of domestic demand, as Victoria re-opened and retail sales lifted 7%. As trade tensions with China grow, the trade balance will be scrutinised.

China comprises over a third of our exports, predominantly buying our resources. Should China’s stance to Australia begin materially effecting the trade balance then this will start impacting economic metrics. So far China’s actions are yet to show a significant effect on the data.

Building approvals continued its strong numbers over the past year. They were up 2.6% against an expected 2%.

Housing dwellings continued to lead the numbers, up 6.1% for the month. Non housing private dwellings on the other hand were down 3.9%, leaving them 13% lower than this time last year.

Josh Stewart

Associate - Money Markets