Australia Exports Gain on Iron Ore Shipments as Home Values Rise

Australia posted its narrowest trade deficit in 10 months and home prices jumped by the most in 2 1/2 years, supporting the case for the central bank to leave interest rates unchanged today.

Imports outpaced exports by A$427 million ($446 million), led by stronger iron-ore shipments, from a revised A$2.79 billion deficit in November, the Bureau of Statistics said in a report in Sydney today. A separate report showed house prices advanced 1.6 percent in the three months through December, the most since mid-2010.

Investors are pricing in a 78 percent chance central bank Governor Glenn Stevens will leave the overnight cash-rate target at 3 percent, pausing after six reductions totaling 1.75 percentage points since November 2011. The Reserve Bank of Australia releases its first monetary policy decision of the year at 2:30 p.m. in Sydney.

“The data are pretty positive,” said Alvin Pontoh, an Asia-Pacific strategist at TD Securities Inc. in Singapore.’’ “The increase in house prices certainly supports the RBA remaining on hold.”

The Australian dollar rose to $1.0444 at 12:30 p.m. in Sydney, from $1.0442 before the data were released.

The median estimate in a Bloomberg News survey of 24 economists was for a trade shortfall of A$800 million. For the house-price report, the median forecast of 15 economists was a 0.3 percent rise.

Iron Ore, Coal

Today’s report showed exports rose 3 percent to A$25.4 billion, led by a 12 percent gain in metal ores and minerals, and a 5 percent advance in coal, coke and briquettes. Imports slumped 6 percent to A$25.8 billion on a 35 percent plunge in industrial transport equipment, according to the report.

The RBA has lowered the benchmark borrowing cost to a level that matches a half-century low reached during the global recession of 2009 to revive industries struggling with a local dollar that’s gained almost 50 percent against the U.S. currency since 2008.

Prices of the nation’s key export, iron ore, have rebounded since reaching a three-year low on Sept. 5 after China announced spending on new subways and roads.

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 November, is lower than 7.9 percent in the U.S.

The report on house prices showed a 2.3 percent gain in Sydney, a 2.9 percent improvement in Perth and a 2.6 percent advance in Darwin in the fourth quarter from the prior three months. Prices declined 1.4 percent in Hobart, the only one of the eight capital cities to record a drop, it showed.

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