Australia: Terms of trade moved lower in 2Q – Westpac

Andrew Hanlan, Research Analyst at Westpac, notes that Australia’s terms of trade for goods moved lower in the June quarter, continuing the choppy profile evident from mid-2017.

Key Quotes

“Import prices rose by 3.2% in Q2, surprising a little to the upside (market median 1.9% and Westpac 2.5%).”

“The cost of imports increased as the currency weakened and global energy prices rose further.”

“Export prices provided the main surprise, increasing by 1.9% in the quarter, whereas a fall was widely expected (market median -1.3% and Westpac -0.8%).”

“Prices for resources were more resilient than anticipated, while manufacturing export prices jumped in the period.”

“Taken together, the terms of trade for goods weakened in Q2, declining by 1.2%. That still left the index 3% above the level of a year ago.”