Investing.com-- Australia’s trade balance shrank to an over three-year low in March, hit chiefly by a sharp increase in imports, while weakness in exports, particularly those of key commodities, remained in play.
Trade balance shrank to a surplus of A$5.02 billion ($3.27 billion), data from the Australian Bureau of Statistics showed. The reading was much weaker than expectations of A$7.19 billion and contracted further from the A$6.59 billion surplus seen in the prior month, which was also revised lower.
The reading showed Australia’s trade surplus at its weakest level since December 2020, when trade was still recovering from the aftermath of the first COVID-19 wave.
Australian imports jumped 4.2% month-on-month in March, extending a 4.8% increase seen in April as local demand for consumption goods- mainly food and beverages- remained robust.
Demand for information technology infrastructure- in the face of increased interest in artificial intelligence development- also factored into higher imports. The imports of Automatic Data Processing equipment jumped 32% in March from the prior month, and were a key driver of the overall increase in imports.
Australian exports rose 0.1% month-on-month, remaining weak as soft prices for the country’s key iron ore and coal exports weighed. While iron ore and coal exports increased in volume, their net contribution to overall exports was substantially dampened by a drop in selling prices through the month.
Weakness in commodity prices was driven chiefly by concerns over slowing demand in top importer China. The country is Australia’s biggest trading partner, with an economic slowdown in China having spilled over into Australia over the past three years.