HSBC Global Research: Australia's record trade deficit - Not as bad as it seems

Coming a day after the Q1 GDP numbers reported very strong export volume growth, today's blowout in the April trade deficit numbers to a record high of $A3.9bn (market had $A2.1bn) may seem somewhat incongruent. But today's weak numbers were the result of the 'perfect storm': almost literally. Exports fell by a whopping -6% in April, largely driven by a fall in coal exports as severe weather temporarily closed ports. At the same time, imports lifted strongly (+4% m-o-m), largely driven by capital goods, which is a positive story for business investment. Exports are expected to bounce back in May, particularly as today's Port Hedland iron ore export figures for May hit new record high. Full report attached