Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Thursday, 3 March 2016

Trade deficit improves a bit

Trade deficit improves

The International Trade in Goods & Services figures for January showed the trade deficit improving by $587 million to $2.9 billion, with the value of imports falling by -1.1 per cent the value of exports rising by +1 per cent.

It's early days, of coure, but this suggests that GDP in the first quarter of 2016 might be quite upbeat too.

In the month of December the iron ore price hit agonisingly low levels.

Remarkably the FOB value of coal exports was higher than that of iron ore in January, a state of affairs that has not been commonplace since 2010. 

The figures below are not seasonally adjusted, and January figures are always weak for obvious reasons, but the value of gold exports recorded another solid improvement in the month.

The brighter news is that after a horrible year the price of iron ore has bounced back by more than +37 per cent from its December 11 low, so with a bit of luck by March these particular figures will be showing an improvement! 

Overall, the value of all other merchandise exports has not been able to compensate for the much lower prices of coal and iron ore. 

In particular, the value of merchandise exports to China have faded significantly from their peak, down by about one fifth. Note how exports to Korea have also befallen a similar fate!

The biggest improvement by far has been in exports to the United States of America. 

The bulk of the decline has impacted revenues in Western Australia, thanks to the iron ore price crash.

This has also been reflected in a sharp decline in Western Australia's trade balance after a remarkable boom. As ever, the eastern states continue to rack up deficits.

Queensland continues its transition from resources construction to exports, with exports of LNG now underway from Gladstone.

In rolling annual terms, the original (i.e. not seasonally adjusted) figures shows Queensland's trade balance continuing to improve steadily to a 44-month high.