Australia has posted its first current account surplus in 44 years with a $5.9 billion surplus for the June quarter.
Increased export volumes of liquid natural gas, coal and iron ore helped lift the account to a larger-than-expected surplus after a $2.9 billion deficit in the last quarter, the Australian Bureau of Statistics announced on Tuesday.
Economist consensus had been for a surplus in the region of $1.5 billion.
A sharp rise in iron ore prices amid heightened US-China trade tensions helped push up the value of exports by 4.8 per cent, while continued weakness in household spending meant the value of imports fell 0.6 per cent.
The rising exports and falling imports will contribute an estimated 0.6 per cent to GDP growth when the June quarter figure is released on Wednesday.
BIS Oxford Economics chief economist Sarah Hunter said the weakness in domestic demand was likely to push the Reserve Bank into another cash rate cut by the end of 2019, although not for at least another month.
“It’s likely we’ll see another weak print for GDP growth tomorrow,” Dr Hunter said.
“And with no big surprises in any of the recent releases, the RBA are very unlikely to change their trajectory for the cash rate.”
Retail spending data released at the same time as the balance of payments numbers showed an unexpected 0.1 per cent fall in consumer spending in July, suggesting stimulus from tax cuts and the June and July rates cuts had yet to flow through.
“The cuts in the cash rate and income tax cuts for low and middle income households should begin to provide some relief as we move towards 2020,” Dr Hunter said.
The Reserve Bank holds its monthly board meeting on Tuesday and is widely expected to hold the cash rate at its record low 1.0 per cent.
ABS chief economist Bruce Hockman said six consecutive quarters of broadly commodity driven goods and services surpluses had laid the foundation for Australia’s first surplus since June 1975.
He said both prices and volume had contributed.
“Similar to the March quarter 2019, continued global supply interruptions have maintained high iron ore prices into the June quarter, boosting our export receipts to record levels,” Mr Hockman said.
“Export volumes for the key bulk commodities of liquid natural gas, coal and iron ore were up.”
The Australian dollar resumed its decline against the US dollar following the ABS’s dual data drop, falling as low as 66.96 US cents.
That’s close to the more than 10-year low 66.77 cents it touched last month.