Australia records biggest monthly trade surplus ever as household spending drives growth

Australia recorded the biggest monthly trade surplus in history as the economy continued to rack up records in a marked rebound from last year’s deep recession.

The Australian Bureau of Statistics said the trade balance of goods and services was a record $10.1bn in January and was up more than $3bn compared with December.

This was the result of a 6% jump in exports, while imports declined 2%.

Economists had forecast a surplus of around $6bn based on preliminary data released last month, with export earnings rising on higher commodity prices, in particular those for iron ore on strong demand from China.

Retail spending also rose by 0.5% in January to $30.5bn, a shade below the 0.6% increase reported in earlier preliminary data.

Even so, annual retail sales were up by a huge 10.6%.

Household spending was a key driver of the strong December quarter economic growth result reported on Wednesday.

“It’s households … that are out there spending because they’ve got confidence in the economy,” the treasurer, Josh Frydenberg, told the Nine Network on Thursday.

“As the vaccine rolls out, I think we will see more confidence across the economy.”

The December quarter national accounts released on Wednesday showed the economy grew by a stronger-than-expected 3.1% after an upwardly revised 3.4% in the September quarter.

It was the first time the national accounts had recorded two consecutive quarters of 3%-plus growth in the 60-year history of the series.

Frydenberg said the Australian economy had been remarkably resilient and noted the government’s support measures had made a big difference.

But he admitted the outlook could be “bumpy” when the jobkeeper wage subsidy ends in March.

“The reserve bank governor and the head of Treasury have spoken about the impact it may have on the labour market in the short term,” Mr Frydenberg told ABC radio during his post-national accounts media blitz.

“But what we will continue to see over the course of the year is the steady trajectory and momentum with the recovery building, particularly as the vaccine is rolled out.”

Other figures released this week included upbeat manufacturing and construction results, while strong job advertising points to further employment gains in coming months.

Low interest rates and government incentives have also seen house prices rise at their fastest pace since 2003 and demand for homes loans at a record high.