Investing.com-- Australia’s trade surplus narrowed to an over two-year low in September, hit chiefly by a sharp decline in the export of some metals, while imports rose sharply amid increased demand for capital goods and recreational items.
The country’s trade surplus narrowed to A$6.79 billion in September, data from the Australian Bureau of Statistics (ABS) showed on Thursday. The reading fell sharply from the A$10.16 billion surplus seen in August, and was also well below expectations for a surplus of A$9.5 billion.
Thursday's data showed Australia's trade surplus at its weakest level since April 2021.
The reading was driven chiefly by a 7.5% spike in imports from the prior month, as companies shipped in more capital goods. A spike in demand for recreational items- such as toys and other leisure items, also fed into higher imports.
While the reading pointed to a weakening in Australia’s trading strength, it also showed that consumer and business spending remained resilient despite higher interest rates and worsening economic conditions.
Such a scenario could indicate stickier inflation in the coming months, especially if spending remains strong. It also raises the possibility of more interest rate hikes by the Reserve Bank, which is set to meet next week.
Exports fell 1.4% from the prior month, hit chiefly by a decline in shipments of metals and non-monetary gold.
Shipments of metal ores, which are among Australia’s top exports, remained steady through the month. But they were also close to annual lows amid weak demand in China, Australia’s biggest export destination.
An economic slowdown in the mainland spilled over into Australia over the past year, denting demand for Australia's key iron ore exports. Weaker commodity prices also weighed on exports.
Australian exports have declined steadily this year, hitting an over one-year low in July before seeing some recovery. But the outlook for commodity demand remains weak amid worsening economic conditions across the globe.