Australia's Trade Deficit Unexpectedly Shrinks in June on Export Strength
Australia's June trade deficit unexpectedly shrank in June for the first month since March after exports grew 1.5%. To much surprise, the previous period's figure was revised sharply downward, to A$737.0 million. Nonetheless, June's deficit of $441.0 million may actually provide signs of hope to a country suffering from continued labor market weakness and economic contraction. Just yesterday the Reserve Bank of Australia shifted its policy stance to "neutral" after citing improved domestic conditions and strong demand from China. Interestingly enough, exports to China actually shrank in the recent period. Such a development may actually lend credence to a statement made last week by Prime Minister Kevin Rudd in which he said that his country should no longer rely on a "mining boom" to prop its economy. As one might guess, China is the largest consumer of Australia's iron ore and coal. Nonetheless, revived export strength provides those betting on Australia's recovery with some short-term hope.