The other side of the current economic paradox, referred to in yesterday's story on car sales, was shown in the May trade figures, which were, in short, sensational.

The Australian Bureau of Statistics figures highlighted the difficulty of the Reserve Bank's current interest rate juggling act: the trade surplus was highest for 14 months and the third highest on record at $1.645 billion.

That was three times the market economists' forecast of $500 million, and came from a combination of much higher values of iron ore and coal exports and the impact of the weaker Australian dollar, not to mention a 4% rise in the value of imports.

All this money flooding into the country (nearly $1 billion extra was found in April).

Tomorrow we will see another part of the paradox, a strong labour market in the June employment data.

Car sales are at record levels, so when all this is taken together, you'd be entitled to ask, why no rate rise?

Well, look at Europe, the slumping level of performance in the American economy (falling inflation everywhere, bar Australia, China and India) and weak consumer and business confidence.

The uncertainty generated by Europe's woes, the cooling trend now emerging in China and sluggish manufacturing elsewhere in Asia and the rest of the major world and the RBA continued its pause.

So the trade surplus came as something of a surprise, given what was happening elsewhere. And you'd be right to ak, how long can this flow of gold continue?

Without the high prices for iron ore and coal, Australia would be struggling with a big deficit and not a surplus that will continue for some months to come, if not longer.

That surplus of more than $1.6 billion was up from the upwardly revised $1.123 billion surplus in April ($134 million originally, so the revision was large and very material).

The revision was made to better reflect the huge increases in iron ore and coal contract prices that started from April 1.

So exports of goods and services climbed 6% in May to $24.75 billion, the highest since November 2008, when the last boom in iron ore and coal (coal prices were much higher) was in full swing.

Imports rose 3.9% to $23.08 billion, with a 10% jump in imports of capital goods suggestive of strong business investment in coming months.

The impact of the higher iron ore and coal prices can be seen from the change in our trade position from March (the last month of the Japanese contract year and most pricing agreements for 2009-10) and May (the second month of the 2010-11 Asian contract year).

In March seasonally adjusted exports were $20.52 billion, in May that had jumped more than 20% to $24.72 billion.

In complete contrast, imports only rose 3.9%, or $883 million, in the three months to $23.08 million, with most of that rise coming in May.

Our terms of trade rose 4.2% in the March quarter and the RBA and other forecasters believe it could rise by up to 20% over 2010.