Australia: Sep trade surplus exploded to AUD3.0b - TDS

Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, notes that the Australia’s Sep trade surplus exploded to +$A3.0b outpacing the most optimistic forecast.

Key Quotes

“The AUD surged through $US0.713 for good reason: substantial upgrades to prior trade surpluses, prices strong, volumes holding up.”

“Sep qtr export prices jumped by +3.7%/q while import prices rose by +1.9%/q, such that the terms of trade rose by nearly +2%/q. The Q3 trade surplus expanded to +$A6.4b, and so the current account deficit looks like shrinking from -2.6% (was -2.9%) to -2.1% of GDP.”

“After the lift in the terms of trade are taken into account, this implies that the trade sector adds +0.2%pt to GDP, double the contribution of Q2. This in turn boosts our GDP tracking to +0.7%/q, or remaining at 3.4%/y, above the RBA's August GDP forecast of closer to 3.25%.”