Australia’s Trade in Goods Account, October
Trade surplus widened slightly in October, but the headline balance masks big swings in gold exports and imports. Goods trade balance: $4.4bn. Export values: up 3.4%mth. Import values: up 2.0%mth.
The latest national accounts, released yesterday, and the balance of payments figures, announced the day before, showed that net exports detracted 0.1ppt from GDP growth in the September quarter. In the post-pandemic period, net exports on average have been negative, and the latest figures appear to have extended that trend. However, yesterday’s data also confirmed that growth in goods exports, which rose by 1.3%qtr, and goods imports, up 2.1%qtr following a 6.7%qtr surge in capital goods, remained elevated for a second consecutive quarter. This suggests that the Australian economy has weathered the storm in global trade brough by the US tariff shock relatively well.
Today’s release of the monthly goods trade data reinforced this impression, showing that both goods exports and imports increased in October, to leave the headline goods trade surplus rising from $3.7bn to $4.4bn, a level slightly above the average for 2025 so far. While trade data have been volatile in recent months, the latest figures emphasise that after having fallen significantly in 2023 and early 2024, the underlying trend in the headline balance has been steadier more recently.
Export earnings rose 3.4%mth to the highest level since late 2023. Over the past two months, they gained more than 11%, although volatile gold flows played an important role. Indeed, non-monetary gold exports were the main driver in September, recovering from a drop in August, and that increase extended further in October, with the monthly change accounting for about half of the total increase in exports. Among other major categories, rural goods exports, which have been strong in recent months, rose 0.9%mth, lifting the annual pace to an impressive 22.1%yr.
Among major commodity exports, iron ore and LNG posted solid increases, while coal exports were weaker. Additional details published by the ABS suggested that the changes in nominal terms were mainly due to shifts in trade volumes. This indicates that the pattern seen in the Q3 balance of payments figures, where coal export volumes led the way and iron ore and LNG exports were weaker, is already being reversed in October.
Looking at exports by country, South Korea and India saw significant increases, which were mainly due to gold exports. Meanwhile, exports to China and the US were slightly lower.
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On the imports side, goods inflows rose 2.0%mth, marking a third consecutive month of firm growth. Within the details, non-monetary gold surged 80% to a record high level. By country, the main increases in gold inflows were from the UK, Canada, Hong Kong and PNG.
Excluding gold, imports were down 0.7%mth, mainly due to a 5.5%mth drop in capital goods imports. Notably, the data processing equipment category declined by more than 30%mth. Strong investment in data centres was one of the key factors behind the surge in business investment in the September quarter, and today’s drop points to possible downside risks for investment growth in the December quarter. Among other major import categories, consumption goods rose 1.6%mth, while intermediate goods saw 0.5%mth growth.
Looking ahead, secular weakness in demand for major commodity exports is unlikely to disappear, and with fortunes in rural goods exports likely to start reversing next year, Australian exports are unlikely to keep pace with import growth, particularly if the firmer momentum in domestic demand, as seen in the September quarter, continues. In the meantime, volatile gold trade is likely to continue driving sharp changes in the monthly goods flows.
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