Australia: Trade surplus widens, exports recover from Cyclone Debbie - Westpac

In May, Australia’s exports and the surplus recovered from the impacts of Cyclone Debbbie, which made landfall on March 28, notes Andrew Hanlan, Senior Economist at Westpac.

Key Quotes

“A $2.5bn trade surplus was recorded for May, exceeding expectations (market median $1.0bn and Westpac $1.8bn).”

“In April, the surplus narrowed to only $0.1bn, downgraded from $0.6bn (centred on revisions to exports), representing a sharp deterioration from a $2.4bn surplus in March.”

“Total export earnings increased by 8.5% in May, up $2.6bn, reversing a fall of 7.5%, -$2.5bn, in April. This was a sharper rebound than anticipated (Westpac +4.7%, +$1.4bn)”

“In May, coal exports lifted to $5.0bn, +$1.9bn, to be largely back at their February levels. Shipments returned to normal in May and average prices increased.”

“Imports met our expectations, up 0.7% in the month, in part due to the weaker currency placing upward pressure on prices.”

“The key implication from these trade figures relates to the profile for export volumes and real net exports. In Q1, export volumes declined by 1.6%, largely due to weather disruptions, and real net exports subtracted a hefty 0.7ppts from GDP. The improvement in export volumes will be spread over Q2 and Q3, on a quarter average basis. This suggests real net exports will be broadly neutral for growth in Q2 and make a sizeable positive contribution in Q3.”