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Trade Surplus in Australia Surged $2.47 Billion After Coal Export Bounces

Australia's trade surplus has risen far more than expected after a recovery in coal exports. The trade balance rose to a surplus of $2.47 billion in May from a now revised $90 million surplus in April when coal exports had slumped from the impact of Cyclone Debbie.

Combined with recent upbeat reports on consumer and business spending, economic growth now looks likely to have picked up from the March quarter's disappointing 0.3% pace. 

 

On a seasonally adjusted basis, exports climbed by $2.58 billion, or 9% during the month, driven mainly by a 62% surge in the value of coal exports and a 39% jump in the value of LNG exports. Imports rose by $205 million, or 1% during the month, on a seasonally adjusted basis.

Shipments of liquefied natural gas (LNG) are also ramping up significantly as new projects come on line. Analysts at National Australia Bank predict the value of LNG exports will pass A$27 billion this year and near A$35 billion in 2018, overtaking coal as the second biggest earner.

Australia has been on track to overtake Qatar as the world's largest LNG exporter, but just this week the Gulf state announced plans to expand its output by 30%.

The West's three biggest energy corporations have expressed interest in helping Qatar with its ambition to produce 100 million tonnes of LNG annually, equivalent to a third of current global supplies in the next five to seven years.

 

Commodity exports were heavily impacted by Cyclone Debbie in late-March, which caused temporary production stoppages at several Queensland mines and widespread damage to rail lines.

The Australian dollar initially lifted on the news, rising to as high as 76.06 US cents, but has since given up the gains. At 1200 AEST, the local currency was trading at 75.92 US cents. 

 

 

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Australian Shares Edges Lower Amid Mixed Economic Data

The Australian stock market is edging lower today with investors treading cautiously ahead of the release of a raft of local and international economic data today.

In late morning trades, the benchmark S&P/ASX 200 Index is dropping 0.10%. The broader All Ordinaries Index is down 0.08% to 5,759.30. Among the major miners, BHP Billiton is plunged almost 1%, while Rio Tinto is up 0.2% and Fortescue Metals is adding 0.6%.

 

Oil stocks are also mostly higher after crude oil prices rose on Friday for a seventh straight session. Woodside Petroleum is adding 0.2% and Santos is advancing more than 1 percent, while Oil Search is lower by almost 1%.

Gold miners are mixed after gold futures extended monthly losses. Newcrest Mining is rising almost 1%, while Evolution Mining is down 0.6%.

The big four banks are also advancing. Commonwealth Bank, National Australia Bank and Westpac are up in a range of 0.2% to 0.9%. ANZ Banking is edging down less than 0.1%. 

In the currency market, the Australian dollar is higher against the U.S. dollar. In early trades, the local unit was trading at $0.7691, up from $0.7678 on Friday.

 

In economic news, the latest survey from the Australian Industry Group revealed that the manufacturing sector in Australia continued to expand in June and at a faster rate with a Performance of Manufacturing Index score of 55. That's up from 54.8 in May and it moves farther above the boom or bust line of 50 that separates expansion from contraction.

Australia will also see the inflation forecast from TD Securities, job ads from ANZ and the commodity price index from the Reserve Bank of Australia plus May figures for building approvals today.

 

 

 

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Unemployment Rate in Australia Declined to 5.5% Lowest in 4 Years

Unemployment rate in Australia fell to a lower than expected seasonally adjusted 5.5% in May from 5.7% in April, the Australian Bureau of Statistics said. It’s Australia’s lowest jobless rate in 4 years.

The number of people employed rose by 42,000, compared with an expected 10,000 rise. The number of people in full-time work increased by 52,100 in May, while those in part-time work fell by 10,100.

 

According to the bureau,  its seasonally adjusted workforce participation rate rose to 64.9% in May from 64.8% in April, and a consensus expectation of 64.8%.

The economy has added around 150,000 new jobs since January. Data supports the view that there is underlying strength in the economy even after Australian GDP grew at its slowest on year pace since 2009 in the first quarter.

CommSec chief economist Craig James said the positive employment trend would provide momentum for the economy, as May’s job creation follows almost 100,000 jobs being added across March and April.

The job market data now comes into line with upbeat business surveys and strong forward looking employment indicators.

 

RBA has its eye on the job market, but has indicated it will largely ignore the weak first quarter GDP data. Interest rates have been held at a record low since August last year and the RBA has indicated its preparedness to remain sidelined for some time yet as it allows inflation to rise slowly.

 

 

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Economic Growth in Australia Declined 0.3% in Q1 of 2017

Economic growth in Australia dropped 0.3% in the first quarter, seeing the the year-on-year increase slow to just 1.7%, the weakest expansion since 2009.

The result was in line with market expectations but well below the 1.1% increase recorded in the Q4 of 2016. Economists have started growing cautious at slowing growth, figures potentially pointing to an inevitable recession. 


Australian Bureau of Statistics tracked 20 industries and 17 have a recorded growth during the Q1, with the best performers including finance and insurance services, wholesale trade and health care and social assistance. 

Agriculture, forestry and fishing decreased after strong growth in the previous two quarters, while manufacturing decreased for the tenth time in 11 quarter. Dwelling investment declined in all states, except Victoria and overall is the largest decline for Australia since June 2009. 

However, Gross Domestic Product (GDP) data were well received by the market, which, after poor net export figures on Tuesday, was primed for disappointment. The Australian dollar shot higher to be up 0.4 per cent at $0.7537. 

Data yesterday showed net exports as a percentage of GDP fell 0.7% points in the Q1, which prompted many economists to trim their forecasts for March quarter growth and offset some stronger inventories data that were released. 

 

According to the Reserve Bank of Australia, the economic growth is still expected to increase gradually over the next couple of years to a little above 3%.

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