Deficit narrows as exports hit the gas
Australia racked up a 29th consecutive International Trade deficit in August, but it narrowed to a 9-month low of $2 billion (although the rolling annual deficit remained at a hefty $33.6 billion).
And, heck, we might even see a trade surplus in the not-too-distant future! It may sound as though I'm drawing a long bow here, but bear with me a moment...
Iron ore (+490 million) and LNG exports (+224 million) improved in the month, although monthly gold exports took an expected hit (-$507 million).
LNG export values were at their highest level in 19 months should begin to ramp up strongly from here as Gladstone projects hit their straps.
In fact, Gladstone port export volumes hit an all-time high of 1.51 million mt in August.
Gladstone Ports has forecast that exports will soar by a further 30 per cent in fiscal 2017 to 15.8 million mt as additional trains come online.
Perhaps the most interesting point to note here is that through August coal export FOB values had barely picked up at all at $2.8 billion, yet as noted here previously coal spot prices have been going absolutely bananas in recent weeks.
As Aussie coal export FOB values are reflected in higher export prices in the next few months, it's just about possible that the prevailing $2 billion trade deficit could flip into a surplus, so watch this space!
A sustained recovery in oil and LNG prices would also help the cause, obviously.
Not big in Japan
Another poor result for Japan merchandise exports saw its share of the export pie sink to 14 per cent, its lowest share of Aussie exports in more than half a century.
Merchandise exports to China weren't too crash hot either for that matter, with the rolling annual total of $74.2 billion the weakest such result in six months.
Western Australia is struggling gamely to lift annual merchandise exports back up above $100 billion, but despite huge export volumes this will be an ongoing struggle in the face of an iron ore glut.
The trade surplus in WA has also rebounded of late as imports have been wound back.
While Queensland has been running consecutive trade surpluses for two years - and will continue to do so as LNG ramps up - the most populous states continue to run substantial deficits in respect of their merchandise trade.
New South Wales does export some commodities, including wheat and coal, but much of what Sydney and Melbourne are responsible for these days is on the services side, particularly education.
Also note that the New South Wales Treasury will report a monumental $4.7 billion surplus for 2015-16, a massive $1.3 billion better than flagged in the June budget.
In part this was due to asset sales as well as an unprecedented stamp duty windfall, and for the first time ever NSW has zero net debt (declining from $5.5 billion last year to positive $57 million).
Services grind higher
Finally, trade services continue to grind their way back helped along by the lower dollar, with tourism in particular a star performer.
Overall, a decent result which eclipsed expectations.
The big unanswered question is whether the massive boom in coal spot prices is reflected in Australian export prices. If so, we might even break the run of deficits one day soon! Maybe.