Trade surplus declines to $7.29b in July

Australia's trade surplus declined from a record high to $7.29 billion in July, suggesting the June quarter's current account surplus might not last long.

Exports were up one per cent for the month on a seasonally adjusted basis, while imports rose three per cent, the Australian Bureau of Statistics said on Thursday.

Market consensus had been for the trade balance to expand to a surplus of $7 billion, and the Australian dollar spiked from 68.12 US cents to as high as 68.25 within after the data's release.

Economists nonetheless expect implications for Australia's current account, which this week showed a surplus for the first time in 44 years.

"While one of the largest surpluses on record, today's outcome is still a meaningful pullback from June's record print," JP Morgan economist Tom Kennedy said.

Mr Kennedy said a near 30 per cent drop in iron ore prices from July's peak meant July's trade surplus fall was unlikely to be a one off.

"It seems like June's outcome is likely to be a high water mark for the external sector," he said.

"This has obvious implications for the balance of payments and is central to our view that the return to current account surplus in 2Q will prove temporary."

Gold exports jumped up $1.1 billion to $2.7 billion against a backdrop of historically high prices but, other than LNG-supported fuels, other resources eased as the surplus pulled back from a revised $7.98 billion record high in June.

"The iron ore price has pulled-back from its recent peak of over $US120 to be around the $US85 to $US90 mark," Westpac's Andrew Hanlan said.

"This will act to trim the surplus in August and September."

Rural exports fell back one per cent to $3.76 billion, although cereal, meat and wool exports all rose.

Austrlaian Associated PressBack to Breaking News

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