LNG and metals exports lift Australia's trade surplus to A$2.8 billion, a seven-month high

The bigger surplus is a modest positive for the Australian dollar and reinforces the currency's tie to commodity prices. With the Middle East conflict keeping energy costs elevated, Australia fares better than many importers, since LNG and coal export revenue helps soften a rising fuel bill. The figures are unlikely to move Reserve Bank of Australia expectations by themselves, not least because the gold component is volatile. For a cleaner read on net exports' contribution to growth, traders will watch upcoming volume data.

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September's trade surplus came mainly from gas and metals, while a sharp decline in gold imports made up the rest.

In summary:

• September's goods trade surplus came in at about A$2.8 billion, the widest reading in seven months
• The result compares with A$184 million in August and was far stronger than expected
• Export values increased 2.3% month on month, with other mineral fuels (including LNG) and metals leading the way
• Import values declined 3.3%, pulled down by gold purchases, which slumped close to 35%
• So far, the higher cost of fuel has not made a major mark on the import bill

According to Australian Bureau of Statistics figures released on Thursday, September's goods trade surplus widened sharply to its strongest level in seven months, helped by increased exports of liquefied natural gas and metals alongside a steep fall in gold imports.

The goods surplus stood at about A$2.8 billion, or close to US$2 billion, up from A$184 million in August. That figure was well above the roughly A$1 billion or less that forecasters had expected.

Exports climbed 2.3% from a month earlier, after a 3.7% increase in August. The advance was led by other mineral fuels — a category that includes LNG — and by metals, underlining how demand for commodities around the world continues to support Australia's resource sector.

Imports fell 3.3%, swinging from a 5.8% rise in August. Gold drove the decrease, with imports of the metal down close to 35%. Because gold movements are often erratic and can easily tip the headline surplus, the size of that decline makes the underlying improvement look somewhat better than it is.

The latest numbers also indicate that the recent upturn in fuel prices has not yet had a clear effect on the import bill. As Australia buys large volumes of refined fuel, a sustained period of higher prices would be expected to lift import costs and could trim the surplus over the next few months.

Higher energy prices affect Australia in both directions, however. Since the country is a major exporter of LNG and coal, strong global energy prices support export earnings and go some way toward offsetting the increased cost of fuel imports.

The stronger trade position supports Australia's external accounts, though how much it contributes to growth will depend on trade volumes over the quarter, not just the value of the flows.

Attention now falls on whether commodity export strength can last and how quickly rising fuel costs show up in imports. Those two questions will decide whether September marked the peak for the surplus or the beginning of a more durable upward trend.