Australia’s terms of trade for goods moved higher in the opening quarter of 2018, partially reversing the dip in mid-2017, notes Andrew Hanlan, Research Analyst at Westpac.

Key Quotes

“Export prices for goods increased by 4.9% in the March quarter, exceeding expectations (market median 4.1% and Westpac 3.7%).”

“Commodity prices in US dollar terms rose by 9% in the quarter, while increasing by 6.6% in AUD terms.”

“Import prices rose by 2.1%, also exceeding expectations (market median 1.2% and Westpac 0.8%).”

“Import prices rose as the currency fell on a TWI basis, down 0.8% in the period, and on higher global energy costs.”

“In the March quarter, the terms of trade for goods increased by 2.7%. Despite this, the index is 4.6% below the level of a year ago impacted by the soft spot in mid-2017.”

“Higher commodity prices early in 2018 provided some support to mining profits and national income. However, over the year to March 2018, the terms of trade for goods moved lower, weighing on incomes.”