RTTNews - Australia's export and import prices dropped at record pace in the second quarter compared to the first quarter, mainly due to the appreciation of Australian dollar, the Australian Bureau of Statistics said Friday.

The export price index dipped 20.6% sequentially in the second quarter, the largest quarterly fall since the series began in the September 1974 quarter. This comes after a 4.6% fall in the first quarter, and faster than economists' expectations of a 16% drop.

The decline was driven mainly by a 36.8% fall in the export prices of coal, coke and briquettes, as also a 23.5% dip in prices of metalliferous ores and metal scrap. This was partly offset by a 12.9% rise in prices of petroleum, petroleum products and related materials.

At the same time, import prices fell 6.4% sequentially in the three months ended June, also due to appreciation of the Australian dollar, and marking the biggest quarterly decrease since the series began in the September 1981 quarter. This follows a 2.8% quarterly fall in the first quarter, and came in above economists' expectations of a 6% drop.

During the quarter, import prices of iron and steel products dropped 22.8%, while prices of miscellaneous manufactured articles fell 13.3%. However, prices of petroleum, petroleum products and related materials rose 6.1%.

In the year to June quarter, export prices fell 0.2%, while import prices were up 5.9%.

Reports released by the statistical office earlier in the month showed that Australia's external sector continued to remain weak. In a report released Thursday, the statistical office said total imports dropped by a seasonally adjusted A$14 million in June compared to May. Total imports declined to A$16.28 billion from A$16.29 billion in the previous month.

The country's trade deficit doubled in May to a seasonally adjusted A$556 million from A$282 million in the preceding month. Exports were down 5%, while imports declined 4%.

Meanwhile, a report released by the Reserve Bank of Australia showed that commodity prices in SDR terms, dropped 1.7% in June on a monthly average basis, smaller than than the 4.1% decrease in May. In Australian dollar terms, the commodity price index slipped 4.9% versus a 8.8% fall in May.

That said, there are signs that the rate of contraction in the Australian economy slowed. A report released by the Westpac Bank and the Melbourne Institute Wednesday said the leading index, which is a good indicator of economic activity in the coming months, slipped 3.9% year-on-year in May compared to a 4.1% drop in April. The index, however, remained negative for the eighth consecutive month.

Further, the coincident index, which measures current economic activity, contracted at a slower pace of 0.1% year-on-year in May compared to 0.5% fall in the preceding month.

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