Australia unexpectedly recorded a trade deficit for a second straight month in February, the first consecutive shortfalls in two years, as coal and metal exports slumped. The local currency fell to a 2 1/2-month low.
Imports outpaced exports by $480 million, from a revised $971 million deficit in January, the Bureau of Statistics said in a report in Sydney today. The median estimate in a Bloomberg News survey of 24 economists was for a surplus of $1.1 billion.
The data add to pressure on central bank Governor Glenn Stevens to end a pause in interest-rate cuts as the economy slows and payrolls fell in February. Exports are about a quarter of Australia's gross domestic product.
The Australian dollar has risen in six of the past seven quarters on a $456 billion pipeline of resource projects driven by companies such as BHP Billiton.
“Despite growing demand from Asia following the Lunar New Year, commodity prices fell for a sixth straight month, dragging on export revenues,” Katrina Ell, an economist at Moody's Analytics in Sydney, said before the release.
Exports fell 2 per cent to $24.4 billion, led by a 16 per cent drop in coal shipments and a 10 per cent decline in metals, today's report showed. Imports also weakened, slumping 4 per cent to $24.9 billion on a 14 per cent decline in consumption goods and a 12 per cent fall in machinery and industrial equipment, the report showed.
Currency falls
The Australian dollar fell as low as $US1.0268 in Sydney, the lowest level since January 16, from $US1.0306 before the data were released. The Australian dollar has risen in six of the past seven quarters, reaching $US1.0856 in late February.
Stevens lowered the overnight cash rate target twice late last year to 4.25 per cent. He paused yesterday for a third straight meeting, while signaling the central bank may resume cutting rates as soon as next month if weaker-than-expected growth slows inflation.
China is Australia's biggest trading partner and its demand for iron ore, coal and energy drove the nation's terms of trade, or export prices relative to import prices, to a record last year.
The Australian dollar has risen in six of the past seven quarters, reaching $US1.0856 in late February as the highest borrowing costs among major developed nations and the opportunity to bet on Chinese growth attract investors.
Australia's economy lost 15,400 jobs in February and recorded the first increase in the unemployment rate since August, to 5.2 per cent, which is still less than half the euro zone's 10.8 per cent level.
Structural shift
RBA Deputy Governor Philip Lowe said last month that the labor market is one of the key indicators the central bank is monitoring for how the economy is managing the “historically unusual” structural change.
“Over the next few years, mining-sector investment will reach new highs as a share of gross domestic product, and is likely to account for around 40 per cent of total business investment,” Lowe said in the March 7 speech. “Structural change is also clearly evident in the export numbers, with resources now accounting for around 60 per cent of total exports, up from 35 per cent a decade ago.”