Australia's Trade Deficit Widens to A$1.61 in August


Australia's trade deficit widened in August as imports of consumer goods, business equipment and oil increased.

The trade shortfall expanded to A$1.61 billion ($1.43 billion) from a revised A$883 million in July, the Bureau of Statistics said in Sydney today. The median estimate of 23 economists surveyed by Bloomberg News was for a A$1.4 billion deficit. Exports rose 2 percent and imports surged 5 percent.

Increased spending by consumers and businesses is stoking an economy in its 16th year of expansion and fueling demand for imported products. Australia's trade balance has been in deficit for five years as exporters struggle to overcome congestion at mines, ports and railways and as drought curbs crop production.

``Imports of machinery and transport equipment are strong, suggesting domestic businesses, particularly in the mining sector, continue to invest heavily,'' Amber Rabinov, an economist at Australia & New Zealand Banking Group Ltd. in Melbourne, said before the report was released. ``The price of imported oil products remains relatively high.''

Total exports climbed to A$18.64 billion in August. Overseas sales account for 20 percent of Australia's economy.

Farm shipments, such as meat, sugar, wheat and wool, fell 4 percent. Exports of non-rural goods, which include minerals, rose 3 percent.

Total imports jumped to A$20.25 billion in August, today's report showed.

Imported Goods

Imports of capital goods, which include business machinery and vehicles, gained 14 percent. Imports of intermediate goods, which include fuel, rose 6 percent. Imports of consumer goods increased 3 percent in August.

Harvey Norman Holdings Ltd., the nation's largest furniture and electronics retailer, in August said annual profit exceeded analyst estimates, spurred by the company's addition of 30 stores in the past year to tap the pickup in spending. That is fueling demand for imported consumer electronics and furniture.

The country's exporters have been less successful in exploiting rising demand for commodities such as iron ore, zinc and coal. Mining companies such as Rio Tinto Group are struggling to overcome congestion at mines, ports and railways.

Australia's monthly trade shortfall peaked at A$2.4 billion in November 2004.

Export growth may accelerate as companies expand mines and oil fields. BHP Billiton has as much as $50 billion of expansion projects to feed rising demand in Asia and Europe.

``China has an incredible appetite and that's filtering through to Australian producers,'' David Moore, managing director of Perth-based Mincor Resources NL, said in an interview. ``There is still very strong demand for nickel. Prices are also still robust, so our sales are increasing on the back of that.''

 


Bloomberg
10/3/2007 6:48:39 AM