AAP appears to have led off another of those wondrous moments in the Australian business media when a bad economic statistic is somehow alchemically transmogrified into gold. Today it is the ABS quarterly International Trade Prices which showed a 2.4% rise in import prices and a 1% rise in exports:
The magic occurs when you somehow turn this into a rise in the terms of trade, as everyone has done. Business Spectator:
The AFR:
The Oz:
Sorry guys, the terms of trade fall when import prices rise more than export prices. On this occasion by 1.3% or so. Even on this you can’t say for sure, though, because today’s release is for goods only.
Moreover “analysts”, get it through your heads, bulk commodities have a lag owing to the three month contract pricing system. The falls in thermal coal in the June quarter will not hit the TOT until the September quarter.
