NZ: Merchandise trade

Tue Apr 28 17:45:00 CDT 2015

Actual Previous Revised
Merchandise trade Balance - level NZ$631M NZ$50M NZ$84M
Exports - M/M percent change 26.6% 6.7% 6.0%
Exports - Y/Y percent change -2.1% -13.4% -14.0%
Imports - M/M percent change 12.8% 6.3% 5.0%
Imports - Y/Y percent change 4.1% 3.7% 2.1%

The value of goods exports to Australia (NZ$8.7 billion) surpassed those to China for the year ended March 2015. For the past five months, exports to China and Australia have both declined, compared with the same month in the previous year. The declines in exports to China were larger than the drops to Australia. It was the first time that Australia was the top export destination since the year ended November 2013.

In March 2015, the trade surplus was NZ$631 million, down from the NZ$904 million surplus in March 2014. Excluding the re-export of a drilling platform to Singapore in March 2015, the trade surplus was $432 million. Total goods exports dropped 2.1 percent on the year in March. Exports to China fell NZ $324 million (29 percent) due to whole milk powder. Exports to Australia fell NZ$26 million. Goods imports were up $169 million (4.1 percent). Consumption goods (including clothing) led the increase (up 19 percent).

For the year ended March 2015, there was an annual trade deficit of $2.4 billion (4.9 percent of exports). This was the largest annual trade deficit since the year ended July 2009. In the March 2015 quarter, the seasonally adjusted value of exported goods fell 0.6 percent compared with the December 2014 quarter. Imports fell 3.3 percent. The seasonally adjusted trade balance for the March 2015 quarter was a deficit of $490 million. Excluding one-off imports, the deficit in the December quarter was $623 million.

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.