'Strong' $1.8b trade deficit posted

A smaller-than-expected trade deficit is a sign of Australia's economic strength, after imports and exports grew in August, economist say.

The Australian balance of goods and services was a deficit of $1.849 billion in September, seasonally adjusted, from a deficit of $1.651 billion in August, figures released by the Australian Bureau of Statistics (ABS) on Thursday show.

During the month, exports were up 5.0 per cent in adjusted terms, while imports rose 5.0 per cent.

Economists were expecting a deficit of $2.15 billion in September.

UBS economist Matthew Johnson said the result was "strong on both counts".

"To understand the Australian trade balance ... you have to look past the headline figure - which was strong in any case." he said.

"A strong rise in exports tells you that foreign demand is strong and the global economy is recovering.

"A strong rise in imports shows that domestic demand is strong."

Mr Johnson said the deficit would lend marginal upward thrust to Australia's third quarter gross domestic product figure, due on December 16.

"At the margin you might revise up your GDP number, but only at the margins.

"For markets I think its a positive.

"Stronger global and domestic economy means higher yields for the Australian dollar."

The data has had no apparent impact on the Australian dollar since it was released at 1130 AEDT.

The local unit has hovered in a tight range around 90 US cents since 0700 AEDT.

ANZ economist Alex Joiner said the trade data reflected the downside of Australia's economic outperformance relative to other nations.

"Import growth is being fuelled by a domestic economy that is recovering well, far ahead of other advanced nations," Mr Joiner said in a research note.

"Import growth is being further supported by the strength of the Australian dollar boosting the purchasing power of local importers.

"On the export side, although Asian, more specifically Chinese, growth has been instrumental in keeping exports afloat, we will need to see a broader global recovery to see exports grow on a more sustained basis."

Mr Joiner said that the expanding trade deficit would be a drag on the September quarter GDP.

"We anticipate that the trade deficit will become entrenched over the next twelve months," he said.

"The size of the trade deficit in quarter three implies that net exports are likely to again be a drag on GDP growth in the quarter."