AUSTRALIA DATA: Surplus Widens But Trend Export Growth Weak
The November merchandise trade surplus widened sharply to $7.08bn from $5.67bn as export growth outpaced imports. Through the volatility though goods exports remain soft and imports consistent with lacklustre domestic demand.
- Goods exports rose 4.8% m/m to be still down 5% y/y after -10.1% y/y in October. Both rural and non-rural shipments rose on the month up 18.1% and 2.1% respectively.
- The strength in rural was driven by the “other” component but all major categories were higher in November. All major non-rural commodities increased on the month except metals, helped by higher iron ore, coal and LNG prices.
- Merchandise imports increased 1.7% m/m driven by fuels & lubricants boosted by higher prices. Imports are now up 6.2% y/y after declining 3.3% in October.
- After declining the previous three months, capex good imports rose 3.3% m/m to be up 0.8% y/y, with all major categories ex aircraft rising, but consumer goods remain the strongest at +15.8% y/y despite a 0.5% m/m fall in November due to vehicles.
Australia merchandise trade balance A$mn
Source: MNI - Market News/ABS
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China's Investment Potential Remains Substantial - NDRC Official
China’s potential investment in green transformation and industrial upgrading remains substantial, especially in quantum technology, artificial intelligence and aerospace, said Zhao Chengfeng, deputy director of the investment department at the National Development and Reform Commission, Xinhua News Agency reported. Meanwhile, high levels of water conservancy investment are needed given flood disasters, while urban underground pipeline renovations to improve gas, water and heating supply need about CNY4 trillion investment over the next five years, said Zhao.
China November CPI Impacted By High Temperatures
China’s lower than expected November CPI print of 0.2% y/y was mainly due to high temperatures and a strong rebound in the supply of fruit and vegetables, according to Wang Qing, chief macro analyst at Orient Securities. Looking ahead, Wen Bin, chief economist at China Minsheng Bank, said CPI would be supported by higher seasonal winter demand for meat, while temperature drops may affect the production and storage of fresh food. CPI may also rise as incremental policies continue improving domestic demand and consumer confidence, Wen added.
AUSTRALIA DATA: NAB Business Survey Points To Another Weak Quarter
November NAB business survey came in weak with conditions down to 2.4 from 7.2, the lowest since end-2019 outside of Covid. Confidence fell to -2.8 from +5.3. There was weakness across components but cost pressures picked up while final product prices remained in line with the historical average. The data is suggesting another soft quarter, but little further progress on inflation. The RBA is widely expected to leave rates at 4.35% later today.
Australia NAB business conditions & outlook
- Labour cost growth remained at 1.4% 3m/3m but purchase costs increased to 1.1% from 0.9% but still below this year’s average. Final product prices rose at 0.6%, unchanged from October, but retail prices eased to 0.6% from 1.1%.
- Capacity utilisation remains above the series average implying that inflation pressures will only come down slowly.
- The RBA has been concerned about services inflation and NAB reported that services conditions were higher.
Australia NAB price/cost components
Source: MNI - Market News/Refinitiv
- Employment moderated to 2.5 from 3.3 but remains above the low for 2024. November jobs data print Thursday and the unemployment rate is forecast to rise 0.1pp to 4.2%.
- Profitability fell to -0.8 in November from +5.2, the first negative since January 2022. Q3 profits fell again driven by the mining sector and that seems to have continued in Q4 given softer commodity prices. Trading fell to +5.4 from +13, the lowest since pandemic-impacted 2020.
- Forward-looking orders fell to -4.8 from -3.0, but remain in line with the 2024 average. The drop was driven by mining and retail. Exports also deteriorated.
