NZ: Merchandise trade

Thu Jul 23 17:45:00 CDT 2015

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$100M NZ$-59M NZ$350M NZ$371M
Exports - M/M percent change -2.9% 5.5% 5.4%
Exports - Y/Y percent change 1.3% -4.7% -4.7%
Imports - M/M percent change 7.6% 1.5% 0.9%
Imports - Y/Y percent change 9.0% -6.9% -7.4%

The June merchandise trade deficit was NZ$59 million -- the first deficit for a June month since 2009. Overall goods exports rose 1.3 percent on the year despite milk powder, butter and cheese exports being down NZ$320 million. Logs, meat and fruit led the rise. Monthly imports rose 9.0 percent compared with June 2014. This was despite the import of large aircraft in June last year and no similar imports this June. The rise was across a range of commodities, including consumption goods from China and machinery and plant from China.

Goods exports to China rose NZ$20 million from June 2014 to reach NZ$699 million in June 2015. The rise was over a range of commodities including logs, meat and fruit. Between September 2014 and May 2015, exports to China fell an average of NZ$373 million a month when compared with the same month in the previous year. Exports to Australia, our largest export partner (annually), fell an average of NZ$43 million a month over that time.

Seasonally adjusted quarterly goods exports were up 0.4 percent from the March 2015 quarter to NZ$12.2 billion in the June 2015 quarter. Fruit exports rose, while milk powder, butter and cheese fell. Quarterly goods imports also rose 0.4 percent. Capital goods imports gained while intermediate and consumption goods fell. The seasonally adjusted quarterly trade deficit was NZ$460 million. This is the fifth consecutive quarterly trade deficit. The last surplus was in the March 2014 quarter.

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.