While the domestic economy and retailers may be in the doldrums, Australia's exporters are going gang-busters, shipping out a record $43.2 billion worth of goods and services in September.
The 3.5 per cent rise in the value in exports outpaced import growth of 2.5 per cent with the net result being a trade surplus of $7.2 billion.
It is the third-largest seasonally adjusted surplus on record, behind the $7.9 billion in June.
In trend terms, September's $7.5 billion is the largest booked by the Australian Bureau of Statistics.
Not only was September strong, but August's result received a significant revision up from $5.9 billion to $6.6 billion.
"Australia's external sector is presently riding the wave of higher export volumes, buoyant commodity prices and an Aussie dollar hovering in the 67-69 US cent range," CBA senior economist Gareth Aird said.
Little trade war impact
Mr Aird said growing concerns about the global backdrop were not showing up in the trade figures.
"Most analysts can rattle off a list of things to be uneasy about — US-China trade policy; Brexit; populism; idiosyncratic issues in western Europe and the slowdown in the Chinese economy — but these angsts are not being reflected in our trade balance," he said.
The export side of the ledger was far better than expectations, led by a number of commodities.
LNG exports rose by 8 per cent, with rural exports up 6 per cent, largely thanks to a surprise 18 per cent lift in cereal grains, while wool shipments rose 14 per cent.
The always-volatile gold jumped 26 per cent, or $558 million, over the month.
However, iron ore and coal were down with weaker volumes and prices generally across the board.
There was also positive news on the import side with an almost 12 per cent lift in capital goods landing.
"A healthy outcome for the investment outlook," Mr Aird said.
"Consumption goods pushed higher, but have barely grown through the year. This marries up with weak household expenditure."
Drought impact delayed
Citi's Josh Williamson noted the current drought was not evident in the export data yet, with rural exports at a five-month high.
"This is surprising given the extent of the drought over farm areas responsible for crop and animal production," he said.
"The answer lies in farmers increasing slaughter rates of cattle and in decreasing inventories of crops," Mr Williamson said.
"However, ABARES estimates 2019-20 farm production was at the lowest since the Millennium Drought, with farm production forecast to be 15 per cent lower than the peak in 2016-17.
"Rural exports will likely not remain immune from the drought for much longer," Mr Williamson said.
Mr Williamson also argued third-quarter net exports may be weaker than the strong second quarter and prove to be a drag on growth.
"In other words, trade should not continue to support overall GDP growth and mask softness in domestic activity," he said.
Third-quarter GDP numbers will be released early next month.
