Another worsening in our trade performance in May.
The days of trade surpluses have gone, banished by the downturn in iron ore and coal prices, while the slump in imports shows the slowdown is still curbing demand, especially for capital goods.
In fact the impact of the global slump on resource projects and other business investment was again seen in a noticeable fall in the value of capital goods in the month, off 14% or more than half a billion dollars.
Export income fell in May faster than imports fell, with the result a deficit of $560 million was recorded, significantly higher than the restated $282 million deficit for April.
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That was originally reported as a deficit of $91 million, and the revisions continue the recent trend of reworking of the monthly trade figures as prices for iron ore, coal and other mineral exports are reinterpreted to get more accurate outcomes.
The Australian Bureau of Statistics said that seasonally adjusted export income fell $1.112 billion (or 5%) to $20.392 billion in May with non-rural goods falling $684 million (5%), other goods $368m (24%) and rural goods down 3% or $86m. Services credits rose $27m (1%).
The ABS said that imports fell 4%, seasonally adjusted terms, ($838 million) to $20.948 billion.
“Capital goods fell $577m (14%), intermediate and other merchandise goods fell $464m (7%), consumption goods fell $54m (1%) and services debits fell $37m (1%). Other goods rose $294m (35%),” the ABS said.
The trade performance will continue to be readjusted for the next few months as more accurate information becomes available on the impact of the big price cuts for coking and thermal coal and iron ore. However iron ore price talks remain deadlocked with the big Chinese buyers, and there’s a growing chance that more tonnage may be sold into the spot market by Rio Tinto and BHP Billiton, which will further add to the monthly variations for export income.
The ABS also detailed a number of revisions to the trade figures going back into 2008.
The import figures though tell us that the economy has gone to sleep, enlivened only by the housing sector and the stimulus boost to some sections of retailing (imports of household electricals rose 6% or $29 million in the month, according to the ABS).
The imports fit with the very subdued business credit figures from the Reserve Bank earlier in the week which showed a fall in May.