The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Tuesday, October 4, 2011

JPM: Aussie trade surplus ballooned to second largest on record

From JP Morgan's economists today:

*Trade surplus ballooned in August to second largest on record
*Imports up over the month (+3%), but exports even stronger (+8%)
*Shipments of hard commodities to Asia robust

Australia’s trade surplus jumped to A$3.1 billion in August (J.P. Morgan: A$0.8 billion; consensus: A$2.0 billion) from A$1.8 billion in July, with both iron ore and coal revenues spiking significantly higher. The external accounts also benefited from a surge in non-monetary gold exports (+30%) and, while these gains will be difficult to sustain, export receipts were up strongly across the board, rising 8% in aggregate and easily outpacing the increase in imports.

The surge in exports in August was the largest since March this year and followed two months of small declines. While exports of rural goods were up 6% over the month, it was the 9% spike in the non-rural category (dominated by hard commodities) that surprised the most on the upside. The coal, coke, and briquettes category jumped 14%m/m, having remained relatively subdued in recent months. Receipts for lump iron ore (+17%m/m) and semi-soft coking coal (+18%) were particularly strong. Moreover, the increases owed entirely to higher volumes. The 17% jump in iron ore exports, for example, owed to a 22% jump in exports to China, driven by a 22% increase in volumes (prices were down 1%) and a 21% jump in exports to Japan, driven by a 26% increase in volumes (prices were down 4%).

These strong results do, though, follow exceptional weakness in prior months, so likely overstate the strength in external demand. That said, while the Asian region is at the leading edge of the global growth downgrades, with their own trade flows being knocked around by inventory overhang and weaker DM growth, the more contemporary data have been fairly constructive from the perspective of Australia’s trade balance. The nation’s largest trading partner, China, for example, accounting for around one quarter of total exports, continues to show considerable resilience, with annual GDP growth still tracking close to the 9% mark this year.

On the other side of the trade ledger, imports were up 3% over the month, owing mainly to an increase in imports of intermediate goods (+7%), again lifted by imports of fuels and lubricants. Consumption goods also were up (+3%), as were imports of non-monetary good imports (+1%). Capital good imports fell 3% over the month, led lower by imports of civil aircraft (+15%).