Australia's Trade Balance Unexpectedly in Deficit

US stock markets had a strong day Friday with the Dow Jones closing 0.8% higher bringing the gain for the first week of the year to 2.2%. The stock market gains came despite some relatively weak jobs data that was reported on Friday. There were 148,000 net jobs created in December which compared to expectations of 190,000 although the unemployment rate did remain steady at 4.1%. Average hourly earnings also grew by 0.3% as expected which reflects one of the stronger months of wages growth in the past 12 months.

The ASX 200 has also had a positive start to the year, climbing approximately 1% last week. This brings the index very close to a ten-year high and represents a full recovery from the losses of the Global Financial Crisis. Of course, the index does not include dividends paid so the total return from the ASX 200 eclipsed the 2007 highs some time ago.  

Australia's trade balance was released on Friday and showed a deficit of $630m despite a $550m surplus being expected. Furthermore, the prior month's figure was revised down to a deficit of $300m. Although exports did rise for the month, by 0.4%, imports rose by a much larger amount, 1.5% with import values for virtually all categories of goods rising on the month. This weak number means that the trade balance will most likely subtract from GDP in the fourth quarter of 2017.

This week both Australian and US retail sales data will be released and coincidentally, both are expected to show growth of 0.4%. 

Data Releases:

–    No Significant Data

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This article was written by William O'Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.