Australian July Trade Deficit Narrows More-than-expected, Retail Sales Growth Eases

Aug 31, 2007 - The Australian trade deficit narrowed more than expected in July, official data revealed Friday. Meanwhile, a separate report showed that retail sales growth slowed from the prior month.

The Australian Bureau of Statistics-ABS announced that the trade deficit narrowed to an eleven month low in July. The trade deficit declined to a seasonally adjusted 756 million Australian dollars in July from a revised shortfall of 1.73 billion Australian dollars recorded in June. The trade deficit for June was revised down from the 1.75 billion Australian dollars estimated earlier. Economists were looking for a shortfall of 1.0 billion Australian dollars for July.

Exports showed a monthly growth, while imports registered a decline in July. Exports of goods and services grew 2.0% to 18.36 billion Australian dollars. Exports amounted to 17.95 billion Australian dollars in June, revised down from the 17.96 billion Australian dollars initially estimated. Export of services dropped by 1 million Australian dollars.

Meanwhile, imports amounted to 19.11 billion Australian dollars, down 3% month-on-month. Imports declined from the 19.69 billion Australian dollars, revised from the 19.71 billion Australian dollars reported earlier. Imports of capital goods slid 342 million Australian dollars and intermediate goods imports dropped 213 million Australian dollars. Imports of consumption goods fell 22 million Australian dollars from the prior month. Services debits showed a growth of 4 million Australian dollars.

In original terms, the balance on goods and services showed a deficit of 840 million Australian dollars. Goods and services credits rose 793 million Australian dollars, while goods and services debits fell 70 million Australian dollars.

In a separate communiqué, the ABS said that retail sales growth slowed to 0.9% month-on-month in July, following a revised 1.5% growth seen in June. The growth number for June was revised up from the 1.4% initially estimated. The number came in better than the expected growth of 0.6%.

Department store sales growth accelerated to 5.7% from the 1.0% rise seen in June, while food retailing growth eased to 0.9%. On the other hand, household retailing showed a fall of 0.7% and hospitality and services revealed 0.3% decline from the prior month. All states and territories, excluding South Australia and Australian Capital Territory showed growth in retail sales. New South Wales recorded the largest increase of 1.7%.

Elsewhere, the Reserve Bank of Australia indicated that total credit provided to the private sector grew at a slower pace of 0.9% month-over-month in July, following a 1.9% growth in the prior month. The number came in weaker than the expected growth of 1.0%. On an annual basis, total credit jumped 15.4% in July.

The central bank added that M3 money supply and broad money climbed 1.2% each from the prior month. On a yearly basis, broad money surged 15.3%.

A report released on Thursday showed that the current account deficit widened to a seasonally adjusted 15.99 billion Australian dollars in the June quarter from a revised 15.54 billion Australian dollars seen in the prior quarter.

The international investment position rose 15.7 billion Australian dollars to a net liability position of 642.4 billion Australian dollars. Net foreign debt amounted to 544.1 billion Australian dollars, up 8.9 billion Australian dollars. Net foreign equity was up 6.8 billion Australian dollars to a liability of 98.4 billion Australian dollars.