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Australia’s terms of trade to get hammered
Topic Started: 1 Aug 2014, 11:41 AM (342 Views)
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http://www.abs.gov.au/ausstats/abs@.nsf/mf/6457.0

The Import Price Index fell 3.0% in the June quarter 2014. Through the year to the June quarter 2014, the Import Price Index rose 5.7%.

The Export Price Index fell 7.9% in the June quarter 2014. Through the year to the June quarter 2014, the Export Price Index fell 1.9%.

This [7.9% quarterly] decrease was driven mainly by falls in the prices received for metalliferous ores and metal scrap (-16.6%), coal, coke and briquettes (-12.5%), gold, non-monetary (excluding gold ores and concentrates) (-4.0%), and petroleum, petroleum products and related materials (-2.1%).

Through the year to the June quarter 2014, the Export Price Index fell 1.9%. This decrease was driven mainly by falls in the prices received for metalliferous ores and metal scrap (-10.5%), coal, coke and briquettes (-13.4%), and gold, non-monetary (excluding gold ores and concentrates) (-3.5%).

The Import Price Index fell 3.0% in the June quarter 2014. This decrease was driven primarily by the appreciation of the Australian dollar against the major trading currencies, as well as falls in the prices paid for petroleum, petroleum products and related materials (-4.5%), telecommunications and sound recording equipment and reproducing apparatus and equipment (-4.7%), general industrial machinery and equipment, n.e.s., and machine parts, n.e.s. (-3.4%), electrical machinery, etc. and parts thereof (-3.2%) and miscellaneous manufactured articles, n.e.s. (-3.3%).

Through the year to the June quarter 2014, the Import Price Index rose 5.7%. This increase was driven primarily by rises in the prices paid for petroleum, petroleum products and related materials (+11.0%), electrical machinery, etc. and parts thereof (+7.4%), general industrial and machinery and equipment, n.e.s., and machine parts, n.e.s. (+6.2%), miscellaneous manufactured articles, n.e.s. (+6.8%) and machinery specialised for particular industries (+6.3%).
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Ollie
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The ABS has released trade data for the month of June, with Australia recording a seasonally-adjusted trade deficit of $1,683 million. The result beat analyst’s expectations, who had expected a trade deficit of only $2 billion.

It was the third monthly trade deficit in a row and followed the $2,043 million deficit recorded in May (revised up from $1,911 million) and the $1,049 million deficit recorded in April (revised up from $780 million).

This quarter’s trade balance has worsened materially, registering a $7,738 million turnaround from the March quarter’s result, which more than hints at a hit to volumes as well as price. This suggests that national income will get thumped, and potentially GDP as well, when the June quarter national accounts is released later this month.

In seasonally adjusted terms, exports rose $125 million to $26,620 million, whereas imports fell $235 million (1%) to $28,302 million.

Australia’s biggest export commodity – iron ore (27.0% share) – rose by $276 million in June in raw terms to $6,255 million. By contrast, Australia’s second, third and fourth biggest exports – coal (13.5 share%), gas (7.0% share), and gold (4.4% share) – rose by $75 million, $309 million, and $67 million respectively.

Exports to China – Australia’s biggest market – rose by $1,088 million to $8,439 million in raw terms, with its share of total exports also rising to 36.4%. Exports to our second, third and fourth biggest markets – Japan (17.0% share), Korea (7.5% share), and India (3.7%) – also rose by $151 million and $348 million and 4101 million respectively in June.

As always, Western Australia dominated the nation’s exports. It alone accounted for 47% of Australia’s merchandise exports in June, with the state’s exports also rising 6% to $10,993 million in raw terms.

Similarly, Western Australia continues to be the state driving the nation’s trade balance, although Queensland and South Australia are also more or less paying their way. By contrast, the prime rent-seeking (banking & finance) states of Victoria and New South Wales remain heavily in deficit.

Finally, Australia’s services trade balance improved marginally in June (+$9 million in seasonally-adjusted terms), with net tourism exports falling (-$35 million).
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