Aussie trade gap widens less than expected

Australia's trade balance fell deeper in the red in September, although less than analysts tipped, as exports matched import growth. It was the biggest shortfall in 18 months.

The country's trade deficit totalled $1.85 billion for the month, more than a revised gap of $1.65 billion for August. Analysts had predicted the gap would rise to $2.15 billion for September, according to a survey by Bloomberg News.

Imports and exports both rose 5 per cent for the month, according to the Australian Bureau of Statistics.

Coal exports rose 9 per cent while non-monetary gold jumped 64 per cent, the ABS said.

"Given the Australian dollar was up 4.9 per cent in US dollar terms on the month this is a good result, particularly the jump in coal exports," said 4Cast Ltd. economist Michael Turner.

Exports of rural goods fell 3 per cent, non-rural goods increase 2 per cent.

Imports of intermediate and merchandise goods rose 10 per cent, while fuels rose 25 per cent.

China dependence

ANZ economist Alex Joiner said September's number was better than market expectations but showed Australia's dependence on Chinese demand.
 
"On the export-side, although Asian - and more specifically Chinese - growth have been instrumental in keeping exports afloat we will need to see a broader global recovery to see exports grow on a more sustained basis," Mr Joiner said.

"This is particularly true for non-resource exports that are battling weak non-Asia demand and headwinds from the strong currency."

"We anticipate that the trade deficit will become entrenched over the next twelve months," Mr Joiner said with net exports likely to be a drag on GDP growth in the quarter.

China's growth has been flagged by the Reserve Bank as a force that has helped buoy the economy through the financial crisis.

"Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets," the RBA said in the accompanying statement to its rate rise by 25 basis points to 3.25 per cent this week.