Australia's trade balance sank back into the red in July
as a recent run of strong coal exports slipped sharply and imports rose,
temporarily allaying hopes of a further improvement in the nation's trade
position.
However, export growth is expected to return in coming months helped by the
fall of the Australian dollar, likely bringing the trade position back into
positive territory.
Australia's seasonally adjusted balance on trade in goods and services
switched to a deficit of A$717 million in July from a surplus of A$351 million
in June, the Australian Bureau of Statistics said Thursday.
The figure contrasts sharply with analysts' expectations of a small surplus
of A$150 million.
Exports fell 1.0% in the month due largely to a 9% drop in the value of
coking coal exports while a 4% rise in imports was driven by fuel and lubricant
flows into the economy.
Australia recorded a deficit of A$964 million in the year-earlier period.
The numbers have weighed on the Australian dollar in Asian morning trade.
ANZ Economist Alex Joiner said Australia's trade deficit may return to a
surplus in the months ahead, with expected further strength in the resources
sector and the full impact of recent export price rises yet to flow through.
"We wouldn't say this is going to be indicative of a trend," Joiner said.
At 0201 GMT, the Australian dollar fell to US$0.8311 from US$0.8332 before
the 0130 GMT data release. Australian bond futures were little changed.
RBC Capital Markets Senior Interest Rates Strategist Su-Lin Ong said that,
while the figure is worse-than-expected, it's likely to have limited impact for
the Reserve Bank of Australia's cash rate target.
She also said the Australian dollar is finding some support around the
US$0.8300 mark.
Macquarie Research Senior Economist Brian Redican expects to see a reversal
of import growth in August.
"There's definitely quite a bit of momentum behind exports now and the weaker
Australian dollar will certainly help that," he said.
"At the same time, the softness of consumer spending should restrain import
growth, so I think we should see a convincing turnaround."