We all know not to take too much notice of one monthly data point, but the dreadful trade data for January are a little disconcerting. Far from the usual run of monthly surpluses around $1.5 billion, in January, a $2 billion slump in exports saw a deficit of $673 million registered.
Now it might be a one-off – a quirk due to a seasonal change, or a few ships not leave until 1 February or some other issue. It is not clear. But what we do know is that the world economy is slowing, to below trend as the RBA puts it; we know commodity prices (in USD terms) have fallen; and we know the Australian dollar was rising without fundamental support.
The potentially poisonous trifecta of a weak world, lower prices and an over-valued AUD just might be having some impact on the trade data. If so, it would be another item to move from the “Good News” side of the economic whiteboard to the “A bit Worrying” side.
It suggests that in addition to the increasingly urgent need for the RBA to cut interest rates for domestic growth reasons, interest rates set a notch or two lower would help take a little froth out of the AUD bubble.