Log in
Login
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

Australia Trade Shortfall Widest Since March 2008

share with twitter share with LinkedIn share with facebook
share via e-mail
0
01/08/2013 | 07:19am CEST

--Economists say deficit may have peaked as commodity prices recover

--Others say deteriorating trade balance is a growth risk

(Adds economist remarks from fourth paragraph)

By Enda Curran

SYDNEY--Australia recorded its widest trade deficit in nearly five years in November as a strong local currency boosted imports, offsetting higher revenues from resources exports.

Analysts said the trade shortfall may have peaked, however, as Chinese demand for industrial commodities recovers. China is resource-rich Australia's biggest trade partner.

The trade deficit widened to 2.6 billion Australian dollars (US$2.7 billion) from A$2.4 billion in October, the Australian Bureau of Statistics said Tuesday. It was the biggest monthly shortfall since March 2008.

"The deficit should soon narrow, at least temporarily, reflecting the very sharp rebound in iron ore prices," said Kieran Davies, an economist at Barclays in Sydney.

Global prices for iron ore have risen more than 70% from multi-year lows struck in September last year, triggered by renewed demand from China's steel mills. Shipments of iron ore from Port Hedland in Western Australia, one of the world's largest export terminals for the commodity, jumped by 20% during December alone.

Tuesday's trade data showed shipments of metal ores and minerals, including Australia's biggest export, iron ore, rose by 6% during November. That offset a fall in coal exports.

"The upshot is that despite the poor headline, the details are far more encouraging," said Alvin Pontoh, an economist at TD Securities. "Exports were relatively solid," he added.

Still, other analysts said it will take a sustained recovery in industrial commodity prices for the country's central bank to end a yearlong campaign of interest rate cuts designed to cushion the economy from a fading mining boom.

"Our forecasts for Australia this year present a picture of slowing domestic demand and the need for further Reserve Bank of Australia interest rate cuts to help rebalance the economy," Citi economists said in a research note.

The central bank last month cut its benchmark lending rate by a quarter of a percentage point to 3%, matching a low reached in 2009 in the aftermath of the global financial crisis.

"The weak trade numbers, coupled with a run of poor domestic data, suggests the RBA will need to cut rates further," National Australia Bank Chief Economist Robert Henderson said in a client note. He added that the trade data pose a risk to already weak growth forecasts for the final quarter of last year.

In the latest sign that activity outside of the mining industry remains weak, a private sector gauge Tuesday showed that Australia's construction sector contracted for the 31st consecutive month in December. The Performance of Construction Index, published by the Australian Industry Group and Housing Industry Association, rose 1.8 points from November to 38.8, but remains below the key index level of 50 that indicates construction activity is expanding.

The central bank has been hoping that a string of interest rate cuts totaling 1.75 percentage points since November 2011 will help revive activity in weaker parts of the economy like home building.

Write to Enda Curran at Enda.Curran@wsj.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
React to this article
Latest news
Date Title
07:21p HOLON : Rabbi Avraham Yosef suspends himself from kashrut responsibilities due to indictment against him
07:18p SAMSUNG ELECTRONICS : 4K VR-ready smartphone display shown off
07:16p RENAULT : Sport Racing to continue Red Bull Technologies partnership
07:07p AFCON : It's Not Time for Experiments
07:06p Brower Piven Encourages Investors Who Have Losses in Excess of $100,000 From Investment in Sunrun Inc. to Contact Brower Piven Before the Lead Plaintiff Deadline in Class Action Lawsuit – RUN
07:00p RIB SOFTWARE : RIB) and Wipro Limited partners to form Global Alliance to deliver end-to-end Advanced enterprise 5D BIM Construction Management solution Energy, Utilities, Infrastructure and E&C Industry
06:50p HAPPY CREEK MINERALS : to update Fox NI43-101 with new metallurgy results
06:50p Brower Piven Encourages Investors Who Have Losses in Excess of $100,000 From Investment in First NBC Bank Holding Company to Contact Brower Piven Before the Lead Plaintiff Deadline in Class Action Lawsuit – FNBC
06:48p BENGUET : Truck falls off Benguet cliff 1dead
06:47p PLDT funding capex via possible Meralco divestment
Latest news
Advertisement
Hot News 
MAY 31 DEADLINE ALERT : GPM Reminds Investors of the Looming Deadline in the Class Action Lawsuit Against DS Healthcare Group, Inc.
K&C REIT : Sells Newbury, Berkshire Retail Site For GBP210,000
VOLVERE : Sees Profits Rise In 2015, Boosted By Shire Foods Sales
PURICORE : To Stop Selling ProduceFresh Until Registered As Pesticide
UBISENSE : Notice of AGM
Most Read News
12:22a AUSTRALIAN GREENS : Greens launch RenewQld – a multi-billion plan for thousands of clean-energy jobs across the state
Most recommended articles
12:37p DATA ANALYSIS FROM PARIS RAID ON GOOGLE WILL TAKE MONTHS, POSSIBLY YEARS : prosecutor
12:22pDJVOLKSWAGEN : 1Q 2016 - Forecast
11:16a BPOST : Belgian, Dutch mail firms to confirm merger talks on Monday-Le Soir
09:56a GEORG FISCHER : Switzerland's Fischer grooms CEO candidates - SonntagsZeitung
05/28DJSUBSCRIBERS : Covestro News Reported in April