From TD Securities:
"** The trade surplus shrank a little from +$A1.42b to +$A1.38b in November, but after allowing for the fuel and flood-related shock to the trade balance in February 2011, the trade balance has remained in surplus since April 2010. The string of healthy trade surpluses has shrunk the current account deficit from -5.3% of GDP in Q1 2010 to just -1.5% by Q3 2011. As we have two months of Q4 2011, disappointing export growth combined with double-digit capital import growth suggests that the current account deficit could widen again to around -2% of GDP.
** In the month of November, exports rose +0.2%, boosted by rural goods (cereals) and non-rural goods fell via metal ores and minerals (coal and iron ore volumes and prices fell in the month). Imports rose +0.4%, driven by capital imports (+5.7%). After capital imports surged +16%/qtr in Q3, a similar outcome is likely for Q4, turning “expectations” of an investment boom into a sharp and stark reality. Eventually this investment boom will morph into a fresh export boom via increased supply.
** So while the trade surplus technically missed market expectations for a stronger outcome, there is good news in here. Exports to China continue to rise while the mining investment boom is in full swing.
** A factoid: for 2011 to date, Australia’s trade surplus with China (close to $30b annualized) is equivalent to +2.1% of GDP...meaning the current account deficit would be -4.2% of GDP for 2011 instead of the likely -2.1%. However, Japan is already there, where Australia’s trade surplus with Japan has been equal to around +2% of GDP every year since 2008...so all the talk about China slowing = less demand for Australia’s exports could be somewhat misguided..."
