Australia’s economic growth should have gained a minor boost from third-quarter international trade, which rose by 16 per cent to the largest quarterly trade surplus on record.
Trade Minister Craig Emerson hailed new data, released on Tuesday, which showed there was a surplus of $7.6 billion in the September quarter, building on the surplus of $2.6 billion for the month of September – which was the fifth-largest monthly surplus on record.
“Australia’s exporters have responded magnificently to extraordinary growth in Asian economies in the Asian Century,” Dr Emerson said in a statement.
It was also the seventh consecutive monthly surplus since floods and weather-related disruptions led to a small deficit in February.
Dr Emerson said exporters had recovered well from this disruption and proved resilient against global economic turmoil and the strong dollar.
“This had allowed them to benefit from continuing healthy demand from China and other Asian powerhouses throughout the year,” he said.
Exports to East Asia have surged by more than 24 per cent in the past 12 months, with shipments to China up by 32 per cent, South Korea up by 26 per cent and Japan up by 19 per cent.
September’s surplus was slightly smaller than the $3 billion surplus reported in August because of a three per cent drop in exports that was only partly offset by a one per cent decline in imports.
It was also smaller than the $3 billion surplus economists had predicted for September.
Nomura Australia chief economist Stephen Roberts said despite this, “there would still seem to be a minor positive contribution to (September quarter) growth from net exports”.
The September quarter national accounts are scheduled for release on December 7.
Other data released on Tuesday suggested that economic growth is treading water in the current quarter with business conditions easing in October.
The National Australia Bank’s monthly business survey showed its conditions index eased three points in October to an index of minus one.
However, business confidence rose to an index of three points, building on the rise in September, but still below a long-term average of six points, although the survey was conducted prior to last week’s interest rate cut by the Reserve Bank of Australia.
“It is likely that business confidence levels should receive a boost in ensuing months,” Commonwealth Securities economist Savanth Sebastian said.
“Although it is unlikely that one rate cut alone can have the profound effect of turning around the lacklustre business survey readings.”
The NAB report said business conditions deteriorated for a majority of industries during October, with the exception of construction, where activity strengthened significantly in what appeared to be Queensland’s reconstruction effort starting to kick in.
There were declines in mining, transport and utilities trading conditions, while the manufacturing, retail and wholesale conditions remained fairly subdued.
Growth in labour costs continued to soften, consistent with the recent deterioration in employment conditions.
“Inflationary pressures are well and truly contained and, if it was required, the Reserve Bank certainly has the scope to cut interest rates (again),” Mr Sebastian said.
“The global environment, particularly Europe, will be a key factor in deciding the timing of the next rate cut.”
