（July 6, 2010）

STRONG commodity prices pushed Australia into a trade surplus for the second straight month in May, official figures show.

Economists say the positive figures are just the start, with Australia set to face a series of surplus' in the coming months.

The Australian balance of goods and services was a seasonally adjusted surplus of $1.645 billion in May, from an upwardly revised surplus of $1.123 billion in April from $134 million, the Australian Bureau of Statistics (ABS) said.

The median market forecast was for a surplus of $500 million in the month.

The current surplus and the strong revision to the April figure was the result of strong demand for Australian commodities, CommSec chief economist Craig James said.

"It's something we're going to have to get used to for the next couple of months," he said.

"The contribution of oil and iron ore are there for all to see."

During the month, exports were up six per cent in adjusted terms, while imports were up four per cent.

Coal made up 17.7 per cent of the nation's exports in the month, while iron ore and other concentrates made up 18.6 per cent.

All other major commodities made single digit contributions.

Despite the strong figures, currency and equity markets did not react to the figures, with the local dollar holding steady at 84.38 US cents after the data was released at 11.30am AEST.

"Unfortunately, nowadays it doesn't move the markets that much," Mr James said.

"It's an encouraging development, but markets seem less focused on the situation."

Nomura Australia chief economist Stephen Roberts said it was possible Australia would see a series of positive trade figures into late 2010 as commodity prices were renegotiated in the third quarter.

"The chances are we will get further improvements into the third quarter," he said.

Reserve Bank data might show what's in store for the June trade figures.

In June, commodity prices posted their eleventh consecutive monthly rise, with demand from Asia extending gains to 46.5 per cent above their low point in May last year.

The index has risen every month since, with the exception of a fall in July last year.

The Reserve Bank's index of commodity prices in special drawing rights (SDR) terms rose 2 per cent in June, according to preliminary estimates released last week.

Mr Roberts said the data also lined up well with the Reserve Bank's strong outlook on the Australian economy.

"This is part of the strong story they have been telling," he said.

"There's some evidence that the strong parts of the economy are as strong as the RBA has been saying."

The ABS is expected to release the June trade figures on August 4.

(Source from: news.com.au)