More than $2 billion surplus signals solid export and steady economic growth
Australia's trade surplus breached the $2 billion median market forecast in October, which prompted economists to muse that the country's expert sector would maintain its robust standing in the months to come.
According to the latest data released by the Australian Bureau of Statistics (ABS) on Thursday, the country's balance of goods and services registered a seasonally adjusted surplus of $23.625 billion in October, coming from the upwardly revised surplus level of $1.814 billion in the previous month.
The headline figures, according JP Morgan economist Ben Jarman, should lead to a hold on the cash rate at least until March 2011 as he told AAP that the export industry ramped up its growth in the last couple of months, "which is obviously pretty positive for our export sector."
The ABS October data revealed that Australian exports went up by 1.0 percent while imports dipped by 3.0 percent, which Jarman said only further enhanced the prospect of the export industry and the whole economy in general unless the inflation levels prove otherwise.
Also, CommSec economist Savanth Sebastian observed that the latest data clearly indicated that higher incomes were shoring up the economy, which he said was the main reason that the Australian central bank had opted for a rate hike in November.
Sebastian told AAP that benefits of rising incomes have yet to permeate the economy as Australians are holding off on spending until the full recovery has become more prominent yet the saving mode could push up the rates in short run.
Over the long term though, Sebastian stressed, more savings mean that future spending would be strong enough to fuel more growth.
On his part, Commonwealth Bank chief economist Michael Blythe said that the new trade numbers pointed to significant boosters driving up the local economy, where early this year the country was running on up to $2 billon monthly deficits.
Yet now, Blythe told AAP that Australian trade surpluses reach a maximum of $3 billion each month and the current $5 billion turnaround per month should be sustained at least in a smaller scale in the coming months.
Further growth, according to Blythe, would still be driven by Chinese demands for Australian commodities, sparking more incidences of surplus but imports would also expand as capital expenditures for export activities require the use of imported machineries.
Also, the CBA analyst said that the ensuing domestic spending due to improved incomes would inevitably fire up Australia's import activities.