Australia Trade Surplus Shrinks

By Glenn Dyer | More Articles by Glenn Dyer

Boy didn’t the market get it wrong – the market forecast for the January trade surplus was put at $3.8 billion, when in fact it fell far short of that at $1.3 billion (which is still impressive).

And it also came in well below December’s bumper surplus, which was revised slightly lower to $3.3 billion.

Surprisingly, exports fell 3% in the month to $31.8 billion, while imports were up 4% at $30.5 billion. Economists explained the drop with a steep slump in non-monetary gold export, which fell 40%, as well as lower coking coal shipments.

The timing of Chinese New Year, which fell in January this year, is also likely to have contributed to the lower surplus.

But Chinese data shows a 70% jump in Australian coal exports in January as imports from North Korea fell.

Data from Port headland shows a fall in iron ore exports in January to 34.4 million tonnes from 37.4 million tonnes (but up 16% from January 2016) which also played a role in the smaller than expected surplus. That fall was a result of the timing of the New Year break. It is also why shipments were higher in December.

Meanwhile approvals for new housing rose an unexpected 1.8% in January to 17,412 dwellings – led by apartments – but are still trending down. That was after a 2.5% fall in December, (previously a fall of 1.2%).

On a seasonally-adjusted basis, building approvals totalled 221,652 dwellings for the past 12 months, down from an annualised 230,813 in December.

The rise in January was driven by a 6.2% rise in non-detached dwellings – mainly apartments – which is a far more volatile measure.

Year-on-year total approvals were down 12% (11.7% in December), while non-detached dwelling approvals were down 14%.

Private sector housing approvals fell three per cent to be down 9.4% year-on-year. The January dwelling approvals numbers were released at the same time as the Housing Industry Association (HIA) released its forecasts for housing construction, which foreshadow a slowdown, especially in multi-unit development (as the slowing pace of approvals are signaling).

The HIA forecasts detached housing starts to ease by 1.7% in 2016-17 ahead of a further fall of 7.3% in 2017-18. In the ‘multi-unit’ market, a 11.3% decline is forecast in 2016-17 followed by a steep 25% plunge in 2017-18.

The HIA said annualised level of commencements, which have fallen from a peak of 231,000 dwellings in March last year, was supportive of its view "that the current new residential building cycle is likely to have peaked in 2016".

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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