June caps off record-setting FY for Oz Trade

June ended what was a record year for Australia’s trade account with new highs set for monthly exports and imports, as well as the biggest ever monthly and yearly trade surpluses that stunned economists by being 40% or more than expected – especially for June.

The June 30 financial year trade surplus hit a record estimate of $173.8 billion (seasonally adjusted), up a huge 73% on 2020-21’s previous record of $99.59 billion.

That was after export income topped the half a trillion dollars for the first time ever at more than $581 billion, a huge 28% more than the previous record of $453.76 billion shipped in the year to June, 2021.

Thanks to higher export prices for coal, LNG, higher exports of non-monetary gold and no significant fall in iron ore prices. The prices for other metals such as copper, gold, silver and nickel were weaker though as world prices eased.

The Australian Bureau of Statistics said the trade surplus was a record $17.670 billion in June, up more than $2.65 billion from the previous record in May of $58.55 billion. It was also substantially more than market forecasts for a figure around $12 billion.

Exports were up 5.1%, or $2.978 billion in June to a new all-time high of $61,527 billion.

Imports in rose $324 million or 0.7% to a record $43.857 billion thanks to higher travel debits as more Australians ventured back into international travel.

The monthly trade surplus was not only the highest ever, but the 54th in a row – the last time we saw a trade deficit was the $1.588 billion dab of red ink reported for December, 2017.

The impact of inflation – both in terms of the selling prices for exports and the cost of imports can be seen in the ABS data.

The difference between the value of exports in the June quarter of this year and 2021 was massive – a huge $50 billion as global commodity prices – led by soaring oil and oil, coal and wheat prices.

The three months to June this year saw exports total $173.8 billion compared with the 2021 quarter figure of $123.11 billion. That’s a difference of 40%!

On the import side, the bill for the June quarter of $128.8 billion was just over 30% higher than the $96.56 billion reported for the June, 2021 quarter.

The 28% rise in the value of imports was mainly down to the rise in the cost of imports of oil and petrol.

ABS data on trade price indices show that the prices of coal, coke and briquettes 271% in the 12 months to the end of June, while the price for gas exports (LNG) jumped more than 105%.

That helped the export price index jump 38.7% in the year to June, while the import price index was up 22.1% in the 12 months.

ABS data shows that the petroleum, petroleum products and related materials jumped 31% in price in the year to June “driven by refined petroleum, due to strong demand, higher crude oil prices and limited refining capacity.”

And while that has had a detrimental impact on the cost of living for millions of Australians, the benefit on the export side to the country as a whole has been much larger.

Our terms of trade are now at all time highs and this will mean billions more in tax revenues for the federal government in the coming year, even as the economy slows.