Australia's trade deficit narrowed in June, defying expectations of a widening, as a surprise increase in manufactured exports accounted for a flat mining performance, suggesting the impact of a weaker trade position on the economy in the second quarter won't be as severe as expected.
However, Australia's terms of trade are expected to continue weakening as a result of significant falls in key commodities exports, namely iron ore and coal, posing some resistance to the economy's recovery prospects.
Official figures showed the seasonally adjusted balance on trade in goods and services narrowed to a deficit of $441m in June from a revised deficit of $737m in May. The figure is lower than analysts' expectations of a deficit of $800m. Australia recorded a deficit of $371m in the year-earlier period. Imports were flat in June from May, while exports rose 2%.