Yesterday we reported on how the worsening in our balance of payments for the September quarter was going to hurt third quarter growth figures.
Part of the reason for the slump was the impact of lower coal and iron ore prices on exports of our most important contracts.
Then we got confirmation that this worsening trend had continued into October with the release of the trade figures showing a widening in the deficit in the month.
This is a trend that will be with us to around April-June next year simply on a comparative basis.
A year ago Australia was enjoying the record prices for iron ore and coal exports and the dying echoes of the high prices for oil and gas exports.
Those record prices continued until March 31 this year and into April and May for delayed shipments carried over.
All those record prices have now gone, gas and oil exports remain subdued in volume and lower in price and coal is not as buoyant. Only iron ore is doing better than a year ago as world steel production improves, led by China.
As a result our trade deficit widened in October as exports of coal and iron ore fell.
The shortfall jumped to $2.38 billion, up more than half a billion dollars in a month from the revised $1.85 billion in September, the Australian Bureau of Statistics said.
Clipping returns is the sharp, 30% rise in the value of the Australian dollar since the start of this year.
Exports are being hampered by the Australian currency’s 31% surge against the US dollar this year, reducing earnings for companies such as BHP Billiton and Rio Tinto Group that sell iron ore to China.
Exports fell 3% to $19.5 billion in October, as coal shipments dropped 12% and iron ore 8%.
Imports were down by 1% to $21.8 billion, led by a 10% drop in fuel shipments.
The ABS said that in original terms, the metallurgical (coking) coal exports fell $345 million, or 24%, with volumes down 12% and prices down 14%. In the metals and ores category, "in original terms, non-agglomerated iron ore fell $193m (8%), with volumes up 1% and prices down 9%".
"Partly offsetting these decreases was the other mineral fuels component, up $217m (18%). In both original terms and seasonally adjusted terms, non-monetary gold fell $235m (17%) to $1,139m," the ABS said.
Among imports, the notable changes was a $58 million, or 12%, fall in the "household electrical items component", according to the ABS. Coming 10 weeks before Christmas that is a small, but intriguing fall.
Perhaps retail sales of small electrical products won’t be as strong this Christmas.
"In original terms the fall in the fuels and lubricants component was driven by crude petroleum, down $175m (17%) with volumes down 11% and prices down 7%. Refined petroleum oils were down $75m (7%) with prices down 7%," the ABS said.
