Australian trade balance for August: -3.095bn (vs. expected -2.4bn)

Consumption goods rose $139 million (2%), intermediate and other merchandise goods rose $67 million (1%) and non-monetary gold rose $26 million (8%).

The deficit was wider than analysts’ expectations of a deficit of A$2.6 billion and compared with a A$2.8 billion deficit in July.

The strongest dollar in more than 12 years and weakness in emerging economies such as China are impeding sales prospects for American companies.

Exports bolstered economic growth in the years following the recession but have been choppy in recent months as the fallout from the European debt crisis and slower growth in Asia dampened demand for United States goods.

“Excluding these categories, which are both volatile and prone to large monthly swings, the underlying trajectory of Australia’s trade data was fairly decent”. And China, the world’s second largest economy, is growing more slowly.

Capital goods fell A$30 million (1 percent), while services debits fell A$29 million. Oil prices have more than halved since last summer.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said that the August trade performance showed that trade will be a “significant drag” on growth in the July-September quarter.

A 3 percent increase in imports from China also factored into the widening of the trade deficit.

The increase in the value of imports partly reflected a jump in imports of cell phones and other household goods. On a volume basis Canadian exports fell 0.6% while prices plunged 3%.

Mr Kennedy said that the surprise in the data was with nominal exports, which fell 0.5 per cent. “We had expected a 1 per cent increase”, he said.

US exports decreased 2 percent to $185.1 billion in August.