NZ: Merchandise trade

Tue Mar 24 16:45:00 CDT 2015

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$375M NZ$50M NZ$56M NZ$33M
Exports - M/M percent change 6.7% -16.0% -16.5%
Exports - Y/Y percent change -13.4% -9.1% -9.6%
Imports - M/M percent change 6.3% -20.8%
Imports - Y/Y percent change 3.7% -3.8%

In February 2015 the trade surplus was NZ$50 million, down from the surplus of NZ$797 million in February 2014. The trade balance for the year ended February 2015 was a deficit of NZ$2.2 billion. This deficit represents a NZ$4.0 billion turnaround since the most-recent peak in the August 2014 year.

Total goods exports dropped 13.4 percent when compared with a year ago. Milk powder, butter and cheese exports led the decline, down 41 percent from February 2014 due to lower prices and a 10 percent decline in quantities exported. Over three-quarters of the drop in value was due to falling exports to China. According to Statistics New Zealand, annual dairy export values continue to decline from the highest annual level, which was in mid-2014. However quantities exported have remained fairly stable. Meat values were up 12 percent compared with February 2014. Frozen beef to the United States continues to push meat export values to new highs.

Imports were up 3.7 percent. Consumption goods (such as clothing) led the incease, up 14 percent. Machinery and plant equipment in the capital goods category rose 13 percent, led by mobile phones (personal and business use).

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.