Good news and bad news from the Trade figures today and yesterday’s numbers on overseas arrivals and departures.
The good news is that there’s been a sharp improvement in our international trade performance in April as exports rose and imports fell, driven by a drop in consumption and capital goods.
Imports were boosted by a return to near normal export levels of coal from Queensland as the mines there flooded earlier this year, lifted production and export volumes. The full extent of the huge new contract price increases won’t be apparent until May and June’s figures.
But the overseas travel statistics show that the number of tourists coming to Australia has slowed to a halt (meaning no growth in what is a valuable source of export income and spending) while the number of Australians going overseas for travel rose 8.6% in the year to April, thanks to the rise in the value of the Australian dollar.
The Australian Bureau of Statistics said this morning that there was a 63% fall in the size of the international trade deficit in April, or a drop of $1.591 billion to just $957 million, the lowest since February of 2007.
Exports were higher, up 6%, seasonally adjusted, or $1.113 billion to $20.446 billion, the highest ever.
Exports of non-rural goods, such as coal coke and non-monetary gold were higher by $955 million while there was a modest rise of $143 million in the value of rural exports.
Imports fell 2%, thanks in part to the slowdown in the domestic economy engineered by the Reserve Bank’s attack on inflation.
The ABS said that seasonally adjusted, imports fell $477 million to $21,403m with a 10% drop in the value of capital goods thanks to a drop in aircraft imports and machinery and 6% drop in the value of consumption goods (or $323 million).
The ABS said that the fall in capital goods was driven by civil aircraft, which fell $329m (77%), and machinery and industrial equipment, which fell $154m (10%). Car imports slumped 13%, even though prices are falling because of the higher value of the Australian dollar and demand remains mostly firm here. Car sales in April and May were solid compared to this time last year in what was a record year.
This is the sort of outcome the Reserve Bank has been looking for in its forecasts and commentaries. It confirms there is a slowing of domestic demand: not rapid, but steady.
Short term arrivals though in April seasonally adjusted were 475,600, up 1.6% on March which fell 0.6% from February.
But the ABS said that in the year to March, arrivals were down half a per cent, while departures were 8.6% higher.
This is a necessary evil resulting from the higher value of the Aussie dollar, a result of the higher interest rates (which will be around for a year or so at this level) and the prospects for a surge in export income over the year.