Don’t believe anyone who wrote or tells you the solid trade surplus for June might cause the Reserve Bank to lift interest rates.
The weak retail sales figures for June, with a small fall being recorded instead of an expected small rise, confirms once again the domestic side of the economy is sluggish, to say the least. (See separate story)
The trade figures won’t, they merely confirm what we have known for over 18 months, that exports are going gangbusters, or rather exports of iron ore, coal and a wide range of other commodities are doing very well and that is why our terms of trade and national income are also rising strongly.
But the figures for June and the year to June don’t tell us anything that will alarm the Reserve Bank.
We know the export side of the economy is booming, we know there’s an investment boom in resources and we know the rest of the economy is not travelling all that well and we know that Europe and the US have gotten a dose of the staggers in the past month or so and growth and demand are falling.
The Australian Bureau of Statistics reported yesterday that the trade surplus narrowed in June (because, it seems, a sharp fall in the export of non-monetary gold).
The surplus fell to $2.052 billion in June, seasonally adjusted, down $647 million from the upwardly revised surplus of $2.699 billion in May ($1.689 billion originally reported).
So based on the originally reported figure for May, the June surplus was up nearly $400 million, but seeing more than $1 billion was added to the May figure in the revisions, it was down:
In reality the size of the revision means the June figure could very well be increased as well in coming months.
Economists had forecast a surplus of $2.2 billion in the month.
During June, exports were flat in adjusted terms at $26.405 billion with shipments of non-monetary gold falling 55% or $894 million in the month.
Imports were up 3.0% or $611 million to $24.353 billion, with imports of intermediate and other merchandise goods rising 4% or $320 million and capital goods which rose $296 million or 7%.
The surplus for the June quarter was more than $6.4 billion for second quarter, against the $3 billion surplus for the first quarter, which was hit by the impact of floods and cyclones on coal and iron ore production and exports.
The ABS said the trade surplus for the year to June was $22.4 billion, a $25.9 billion improvement from 2009-10.
On the basis of the preliminary figures, that’s an all time high for the trade surplus.
Exports rose $US44 billion or 17% and imports were up 7% or $18.2 billion in the year.
