Pete Wargent blogspot

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

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Wednesday, 4 February 2015

International trade - deficit narrows in December

Housekeeping

Yes, I know, everyone wants to talk about interest rate cuts and Sydney house prices today.

Well, it's my blog, so I'm afraid we will have to step through the international trade figures first before we go on to look at the building approvals data...c'est la vie.

I'll keep it brief.

Part 1 - Deficit narrows

The trade deficit narrowed to a seasonally adjusted $425 million from a revised $1,106 million in December, notching up the ninth consecutive monthly deficit. 


Part 2 - Commodities export values increase

In terms of the estimated monthly value of commodities exported, coal had its best month since December 2013 at $3,664 million. 

These figures seem to make sense with what we have seen elsewhere for export volumes and moderate improvement in the A$ price.

The iron ore export results appear somewhat less convincing.

Iron ore also recorded its strongest month since May at $5,430 million, though I confess I'm a touch addled by the estimates used by the ABS for iron ore unit values, which don't yet appear to fully reflect the price weakness seen on global markets (to my untrained eye at least). 


The total value of monthly merchandise exports recorded here at $24,367 million was also the strongest result since December 2013.

Part 3 - Destination (mostly China)

Some 32 percent of merchandise exports by FOB value was bound for China (excluding SARs and Taiwan), with Japan (18 percent), Korea (8 percent) and India (4 percent) also featuring prominently.


As is usual Western Australia led the way with 45 percent of exports by FOB value, with Queensland (+18 percent) and New South Wales (+15 percent) also contributing significantly as coal prices rallied.


Part 4 - Services floundering 

Finally the monthly trade services balance continues to flounder, although the balance for tourism services has picked up, remaining in positive territory since February 2014 and building a little momentum as the Australian dollar declines.


OK, I think we're done here.

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The Bank of Queensland and ME Bank have announced that they will pass on yesterday's interest rate cut, adjusting their advertised rates down to 5.13 percent and 4.62 percent respectively.

The majors are yet to announce their revised rates.