NZ: Merchandise trade

Wed Feb 25 15:45:00 CST 2015

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$-158M NZ$56M NZ$-159M NZ$-160M
Exports - M/M percent change -16.0% 9.4% 8.9%
Exports - Y/Y percent change -9.1% -6.9% -7.3%
Imports - M/M percent change -20.8% 5.9% 6.2%
Imports - Y/Y percent change -3.8% 7.7% 8.0%

January merchandise trade balance recorded a surplus of NZ$56 million after December's steeper revised deficit of NZ$194 million. Analysts expected a deficit of NZ$158 million. Both exports and imports were down.

Total goods exports were down (9.1 percent to $3.7 billion in January 2015 compared with January 2014. Milk powder, butter and cheese exports drove the decline, down 30 percent, led by lower prices. The quantity of dairy products exported was up 2.9 percent, led by cheese and butter. However the quantity of milk powder exported fell 3.1 percent. A 20 percent rise in meat exports partly offset the decline in monthly exports, led by frozen beef, up 53 percent.

Imports declined 3.8 percent to $3.6 billion. The decline was led by intermediate goods (such as crude oil and automotive diesel), down 9.8 percent.

Seasonally adjusted exports were up 2.7 percent on the month, led by increases in fruit and wine exports. Seasonally adjusted imports declined 8.5 percent.

The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Trade balance values are calculated by deducting imports (cif) from exports (fob).

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the NZ dollar in the foreign exchange market. Imports indicate demand for foreign goods in New Zealand. Exports show the demand for NZ goods in countries overseas. The currency can be sensitive to changes in the trade deficit run by New Zealand since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation.