Aussie trade deficit blows out to 3.3 bln AUD

Australia's October trade deficit has blown out beyond market expectations, which saw exports fall 3 percent while imports remained flat.

Australia's trade deficit blew out to 3.3 billion Australian dollars (2.41 billion U.S. dollars) in October, official figures released by the Australian Bureau of Statistics on Thursday showed.

The October trade deficit was larger than the 2.6 billion Australian dollars (1.90 billion U.S. dollars) economists expected, while casting a shadow over September's 2.4 billion Australian dollar (1.76 billion U.S. dollar) deficit.

Australia's higher trade deficit was driven primarily from falls in goods exports, down 4.1 percent in October, with the largest drag in iron ore, down 5.8 percent month-on-month which also saw corresponding decline in exports to China, down 1 percent.

Large nominal trade deficits are likely to continue due to falls in bulk commodity prices over the past year while further price falls cannot be ruled out, Commonwealth Bank senior economist Michael Workman said.

However a favourable picture in the trade data is the consistent annual growth of agriculture goods, up 11.4 percent year-on-year, accounting for 14 percent of total goods exports.

"The recent trade agreements signed with our major trading partners are likely to keep annual growth positive for rural items," Workman said.

"Rural exports ... could be a consistent income source for rural producers in the next few years if higher food and protein spending trends in Asia continue."

National Australia Bank economist Tapas Strickland however is confident Australia's trade deficit will shrink when liquefied natural gas (LNG) exports grow significantly next year.

"The Santos-led GLNG had its first export of LNG in mid-October, and Origin-led APLNG is expected to commence first export shipments soon," Strickland said.

"More growth from LNG is expected in 2016 and 2017 from these and other LNG plants such as the giant Gorgon LNG facility." Endit