Pete Wargent blogspot

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

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Saturday, 4 June 2016

Trade deficit improves by 20 per cent

Deficit improves markedly

Australia's trade deficit improved significantly by 20 per cent in April as services exports soared to record highs and imports slowed.

Services ramp up

There was another jump in the value of gold exports in the month, and behind the scenes services exports are quietly roaring, up by 19 per cent over the past year. 

The total annual value of merchandise exports has taken quite a hit since 2014 with iron ore and coal prices having nosedived, but things seem to have stabilised a bit in this regard.

Indeed the annual value of merchandise exports from Western Australia increased in the month for the first time in two years, while Queensland should also enjoy a moderate rebound in commodity prices.

Western Australia's trade balance has improved as a result.

The dollar value of exports to China has also enjoyed a bit of a rebound over the last couple of months, driven by the same dynamics.

Tourism & education boom

There's an awful lot of focus on the price of iron ore, but meanwhile Australia is enjoying a record boom in services exports, and particularly in education and tourism.

The wrap

Overall, it was a fine start to the June quarter with the trade deficit of $1.579 billion in April a huge improvement on the eye-popping $4.432 billion trade deficit recorded in April last year.  

It seems unlikely that net exports could again contribute this quarter as massively as they did to growth in the first quarter, but it's great to see things moving in the right direction.

Over the six months to March 2016 the economy has been growing at an annualised pace of 3.6 per cent.