May was a record month for Australian trade with a 20% rise in the size of the surplus from April’s highs which was in turn 50% more than market forecasts.
Australian exports, imports and the trade surplus all hit record highs in May as we continued to ride the surge in energy demand and prices in the wake of the Russian invasion of Ukraine in late May.
Market forecasts were around $10.8 billion as economists missed the surge in the value of coal exports in particular.
The record monthly surplus of $15.965 billion though could be the peak as the slump in commodity prices from mid-May and into July, plus weaker demand could trigger a fall.
While the weaker Aussie dollar will help offset the impact from those weaker commodity prices, the falls seen for base metals in particular and iron ore will see the surplus shrink in coming months.
The May trade data from the Australian Bureau of Statistics revealed a $2.717 billion jump in the size of the surplus.
That was after a 9.5% jump ($5.045 billion) in the value of exports of goods and services to the all-time high of $58.402 billion for the month, thanks to “rises in exports of Coal, coke and briquettes and Other mineral fuels.”
That offset a solid 5.8% or $2.337 billion rise in the value of imports of goods and services to a record $US42.437 billion.
The rise was driven by imports of fuels, lubricants and motor vehicles.
Fuel imports were up 23% in value because of higher world prices for oil and petrol.
For the first five months of calendar 2022, the trade surplus totalled $60.67 billion, around a third higher than the $45.65 billion for the first five months of 2021.
But since March, the trade surplus has surged 50% from the levels of the same period in 2021 to total $39.61 billion (from $26.27 billion), underlying how Australia has been favoured by the boom in commodity prices and the weakening value of the currency.
The same effect can be seen in both exports and imports for the three months to May. For 2022, exports for the three months totalled $162.57 billion, up a third from the $122.35 billion in the same period of 2021.
Imports this year for the three months to May totalled $123 billion, up nearly $25 billion or around 26% from the $98.1 billion a year earlier.
The value of coal exports topped than of iron ore for the first time in years with a 20% rise in the month alone to $14.7 billion mainly by an increase in shipments of thermal coal to Vietnam, South Korea and Taiwan. Coal exports have risen 230% in value in the past year.
China’s ban on imports of coal from Australia again backfired and failed to have any impact at all.
The lift in exports came from a mix of higher prices and volumes, suggesting trade would make a sizeable contribution to June quarter GDP.
The trade figures are consistent with net exports boosting Q2 GDP growth by as much as 2.0 percentage points, which would be one of the biggest contributions ever recorded, said Marcel Thieliant, a senior economist at Capital Economics.
