The shortfall swelled to A$556 million ($448 million) from a revised A$282 million in April, the Bureau of Statistics said in Sydney today. Exports fell 5 percent.
Prices for iron ore and coal have declined, damping a mining boom that drove Australia’s 17-year economic expansion. BHP Billiton Ltd., the world’s biggest mining company, and Rio Tinto Group have pared output, fired workers and cut capital expenditure in response to the slowdown in world demand.
Australia avoided a technical recession in the first quarter as government stimulus and interest-rate cuts stoked consumer spending. The economy expanded 0.4 percent from the fourth quarter, when it shrank 0.6 percent.
Imports fell 4 percent to A$20.95 billion from April. Imports of capital goods, such as trucks and machinery, dropped 14 percent and consumer goods slipped 1 percent.
Exports declined to A$20.39 billion, the lowest since March 2008. Shipments of non-rural goods, which include metals and minerals, fell 5 percent. Agricultural sales dropped 3 percent. Coal sales slumped 15 percent and shipments of cereals declined 7 percent.
BHP Billiton agreed to a 58 percent cut in annual coking coal contract prices after demand for the steelmaking material fell, according to a company statement last month.
Rio Tinto, the world’s second-largest iron-ore exporter, agreed to a 33 percent cut in contract prices with Japanese and Korean steelmakers this year. It has yet to agree on prices with China, the world’s biggest consumer of iron ore. BHP Billiton has yet to announce any agreed contract prices this year.
Australian businesses cut spending on machinery and equipment in the first quarter by 9.6 percent, the most since 1991, amid faltering global demand. Rio Tinto slashed its global spending by more than half to $4 billion this year and BHP shut its $2.2 billion Ravensthorpe nickel mine.
Still, even as miners are buffeted lower commodity prices, a recovery in global demand may support Australia’s export earnings.
Reports this week show China’s manufacturing expanded for a fourth month, Japan’s business confidence improved and South Korea’s factory production climbed for a fifth month. China and Japan are Australia’s largest export markets.
Macarthur Coal Ltd., the world’s biggest exporter of pulverized coal used in steelmaking, has received increased sales inquiries this year from China, not a traditional export market for Australian coal, Shane Stephan, chief development officer, said last month.