The Australian Bureau of Statistics (ABS) has announced Thursday that the country achieved its first trade surplus in 13 months, with its balance of goods and services surpluses reaching a seasonally adjusted $134 million in April, coming from the March revised deficit of $2.04 billion for a turnaround of $2.174 billion.

The new ABS data showed that the April figures appeared higher than the median market forecasts of about $800 billion deficit while the value of exports increased by 11 percent in April, contributed largely by iron ore and coal exports with 25 percent and 45 percent hikes respectively in the same month.

ABS said that iron ore exports spiked by 32 percent in original terms coming with a two percent rise in volumes with up to 29 percent jump in price.

National Australia Bank (NAB) senior economist David de Garis said that the rise in bulk commodity prices is a definitive sign that China and Asia's growth are again stimulating the country's economy by "lifting purchasing power and nominal income growth, pushing Australia's term's of trade to a new high in coming quarters."

On the other hand, Citigroup's Paul Brennan observed that the ABS data is manifesting the growing share of Australia's exports to both China and India, stressing that "in the first 10 months of financial year 2010/11, China's share of Australia's merchandise exports rose to 22 per cent, up sharply from 16 per cent in the same period of financial year 2009/10."

He added that India's export share increased by 8.3 percent, coming from the 6.4 percent recorded in financial year 2009/10 while the ABS data noted that imports were generally stagnant in April.

ANZ senior economist Katie Dean affirmed that the rise in the terms of trade would sustain the rise of Australia's national income this year, as she noted that local coal producers have agreed to a 12.5 percent jump in coal contract prices for the third quarter while iron ore contract prices are heading for two-digit price hikes on the same period.

The Reserve Bank of Australia (RBA) has reported on Monday that its index of commodity prices spiked by 2.9 percent in May, sustaining a bit the 18.6 percent rise seen in April.

Su-Lin Ong, senior economist of RBC Capital Markets viewed the acceleration in the terms of trade as signal for the RBA to raise the interest rates in order to cushion pressures on inflation.

She said that the likelihood of the cash rates moving to a modestly restrictive setting is very big at this point, especially "at a time when there is limited spare capacity in both goods and labour markets with core inflation still running above the ceiling of the RBA's 2-3 per cent target range."

Ms Ong is predicting that the central bank would eventually lift the cash rate half a percentage point to 5.0 percent by the end of this year.

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