(Bloomberg) --
Australia's trade surplus narrowed in July, with overseas shipments underpinned by record gold exports, while imports jumped on increased consumer goods.
Imports lifted 7% while exports fell 4% for a trade balance of A$4.61 billion ($3.38 billion), the statistics bureau said in Sydney Thursday. That was weaker than the A$5.4 billion median estimate.
Demand for gold surged as investors rushed for shelter from global economic uncertainty triggered by Covid-19. Iron ore, Australia's largest export, edged down from very high levels a month earlier. It's still trading around $120 a ton as China's burgeoning recovery fuels demand for the steel-making raw material.
On the other side of the ledger, Australian households, faced with fewer spending options under virus restrictions and cashed up from government stimulus support, splurged on consumer goods.
“Looking forward we expect another solid trade surplus to be recorded in August with higher iron ore prices helping,” said Belinda Allen, senior economist at Commonwealth Bank of Australia. “An improving domestic demand story should see import growth recover and those trade surplus numbers average lower.”
As political tensions between Beijing and Canberra have intensified, China's trade bans on a range of agricultural products began to show up in the data -- grain exports slid nearly 40%, while meat fell 10%.
Australia officially entered its first recession since 1991 on Wednesday, recording a 7% contraction last quarter, the deepest in records dating back to 1959.
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