Stronger export volumes have helped temper sliding commodity prices to deliver a better-than-expected trade deficit for Australia.
The deficit widened to $925 million in November, seasonally adjusted, but the result was significantly smaller than the $2 billion deficit economists expected, official figures on Tuesday showed.
The result came after a major revision to October's trade deficit, which was reduced to $877 million.
National Australia Bank senior economist Spiros Papadopoulos said although the figures were better than expected, the deficit had widened since October, reflecting the ongoing deterioration in Australia's terms of trade.
He said the volume, rather than the value, of Australia's exports, helped produce the better result.
"It's the same old story where we've got deteriorating values but the volume side of things still looks good and is still pointing to a good contribution to economic growth this year," Mr Papadopoulos said.
"We're still seeing good volumes growth coming through, but the price impact has obviously been quite significant."
Exports and imports both rose one per cent in November, the Australian Bureau of Statistics said.
CommSec chief economist Craig James said while the result was better than expected, it was the eighth monthly trade deficit in a row.
But LNG exports would help Australia's trade balance get back to surplus in coming years, he said.
"The outlook is more encouraging because the lift in LNG exports have just commenced and over the next couple of years, they're going to be adding substantially to our export receipts and that should cause our trade accounts to turn around and get back into the black," he said.
Commonwealth Bank economist Gareth Aird said a return to surplus was realistic in the medium term as the lower Australian dollar would lift non-mining exports and make all exports them more competitive.
The figures highlighted the importance of China to the Australian economy, he said.
"Resource exports to China will continue to dominate the trade story ahead, but services exports will also be important as the Chinese economy rebalances away from investment towards consumption," Mr Aird said.
"The Chinese rebalancing act will provide further opportunities for Australia's tourism and education sectors."
St George senior economist Janu Chan said while the improved trade position was welcome, it was partly due to weaker imports, suggesting softness in domestic demand.
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