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Iron ore exports drop, prices still high

Australian exports dropped nine per cent in January, led by a fall in iron ore shipments after a strong result the previous month.

Australian Bureau of Statistics said iron ore exports declined by seven per cent or $963 million in January, although this could have been worse if not for the ongoing strength in prices, which were up seven per cent in the month.

“The strong prices have been driven by ongoing Chinese demand and weaker than expected output from Brazil’s largest iron ore mine,” the ABS said in releasing the data on Tuesday.

While metalliferous ores dropped 10 per cent or $1.5 billion overall, they were still up 53 per cent or $4.9 billion higher over the year.

Preliminary figures show total exports were down $3 billion to $32.1 billion in January.

Imports also fell 10 per cent or $2.6 billion to $23.4 billion, lead by a 23 per cent drop in road vehicle shipments, the first decline since May.

This still left a goods trade surplus of $8.8 billion for the month.

The preliminary trade series was introduced by the ABS to give a more frequent update on the economy during the COVID-19 pandemic.

Meanwhile, the weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – fell 0.6 per cent, its third consecutive decline.

The confidence gauge’s sub-indices proved a mixed bag, with perceptions among respondents views on their current and future financial conditions declining.

The only bright spot was views on general economic conditions in the next five years, rising 1.6 per cent.

ANZ head of Australian economics David Plank said the last fall in the index came despite the easing of COVID-19 lockdown restrictions in Victoria.

He was also surprised that the ‘time to buy a major household item’ component dropped by 3.9 per cent – its largest drop since August last year – coming at a time when the housing market is strengthening.

“We would expect the two to go hand-in-hand, so the relative softness of this aspect of sentiment may not endure,” Mr Plank said releasing the report on Tuesday.

Wednesday’s release of key wage growth figures for the December quarter may give reason to be gloomy.

Economists expect these will show wages grew at a meagre 0.3 per cent in the quarter to a limp annual rate of 1.1 per cent.

The only upside to these Scrooge-like conditions is that annual inflation is crawling along at 0.9 per cent.

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