Australia’s trade deficit narrowed more than economists forecast in September as imports of machinery and civil aircraft fell faster than a drop in metal- ore exports.
Imports outpaced exports by A$1.46 billion ($1.51 billion), from a revised A$1.88 billion deficit in August, 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 deficit of A$1.55 billion.
Nine monthly trade shortfalls this year add to the case for Reserve Bank of Australia Governor Glenn Stevens to extend interest-rate reductions tomorrow after he resumed lowering borrowing costs last month, cutting to 3.25 percent, as commodity prices ease on weaker Chinese growth. Policy makers are trying to revive demand outside of a resource boom that may crest at a lower level than previously expected.
Today’s result reflects “a fall in resources exports on weak iron ore exports values,” Andrew McManus, an economist at Australia & New Zealand Banking Group Ltd. (ANZ), wrote in a research report before today’s release. “Other non-rural exports are also expected to remain weak, with the persistently high Australian dollar weighing on these exports.”
Exports fell 1 percent to A$24.2 billion, led by an 11 percent drop in metal ores and minerals, today’s report showed. Imports declined 2 percent to A$25.6 billion on an 11 percent decline in machinery and industrial equipment and a 34 percent drop in a category that includes civil aircraft, the report showed.
The Australian dollar bought to $1.0354 at 11:54 a.m. in Sydney compared with $1.0344 before the data were released.
“The slowing of growth in China had resulted in weaker demand for steel, which was evident in the falls in steel and iron ore prices in August and had resulted in lower steel production,” the RBA said in minutes of its last meeting released Oct. 16.
Australia’s economy has been driven by a resource bonanza for iron ore, coal and natural gas that is bringing record investment in projects. The nation’s unemployment rate, at 5.4 percent in September, is lower than 7.9 percent in the U.S. and 11.6 percent in the euro area.
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