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Australia trade balance beats expectations in Dec as exports improve

Published 02/05/2024, 08:56 AM
Updated 02/05/2024, 08:56 AM
© Reuters. Australia clocked a bigger-than-expected trade surplus in December as improved offshore demand for fuels and metals helped push up exports, while increased consumer spending during the year-end holidays supported imports. 

The country’s trade balance showed a surplus of A$10.96 billion in December, data from the Australian Bureau of Statistics showed on Monday. The reading was slightly above expectations for a surplus of A$10.51 billion, but retreated from the A$11.44 billion seen in November.

Exports grew 1.8% in December from the prior month, aided chiefly by increased shipments of mineral fuels and gold during the month. Colder weather spurred increased demand for liquefied natural gas, while a mild pick-up in manufacturing activity in China helped spur demand for metals.

Australia’s trade balance still fell in December from the prior month, as the country’s key metal ores and coal exports fell during the month. A 4.8% month-on-month increase in imports also weighed, with consumption goods exports surging nearly 10%  during the month amid increased holiday demand for consumer goods.

But Australian imports were nursing a sharp 7.9% drop from November, as local consumer spending remained relatively weak in the face of high inflation and interest rates. 

Australia’s trade balance has stabilized in recent months after sinking to a near three-year low in September. Slowing economic growth in major export destination China has been a key point of contention for Australian exporters, especially as the mainland struggles with a sluggish post-COVID economic recovery. 

While exports grew in December, they remained well below a peak hit in mid-2022. Warmer weather across much of the globe has also kept demand for heating fuels limited. 

Still, increased LNG demand in Europe, especially after the U.S. halted LNG shipments to the bloc, is expected to increase exports of the fuel from Australia.

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