Mining exports drive trade surplus

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Picture: http://www.freedigitalphotos.net/ (wandee007)

Australia has posted a $1.2 billion monthly trade surplus in February, which was the country’s third consecutive positive result following a surplus of $1.392 billion in January, and $469 million in December.

Picture: http://www.freedigitalphotos.net (wandee007)
Picture: http://www.freedigitalphotos.net (wandee007)

According to the article on The Australian, RBC Capital Markets currency strategist Michael Turner said the positive trade results were largely down to the surprisingly strong results in mining exports.

“Unlike previous months, the source of the surprise was in coal, which rose six per cent in value terms despite ongoing softness in spot prices. Other mineral fuels were also up nine per cent, which more than accounted for falls in gold and rural goods exports,” said Mr Turner.

“On the import side, the jump in capital goods serves as some reminder that investment has not fallen off a cliff. A drop in fuel imports provided some offset.”

Mr Turner said he expected mining and resource exports to continue to strengthen as more projects went into production, after record levels of investment in the sector.

“The outlook for the trade balance has been well documented: persistent surpluses as mining production picks up and investment slows,” he said.

“If anything, recent trends underscore just how much contribution net exports will likely make (to economic growth) this year.”

A JP Morgan economist said it was the third consecutive month of strong trade figures.

“These are very strong results, really being driven by the usual factors that you’d expect in the current resource boom,” he said.

“Iron ore exports were up and we are starting to see signs of capital imports pulling back. Both those things are part of a longer term trend we expect to play out over the next few years.”