NZ: Merchandise trade

Mon Oct 26 16:45:00 CDT 2015

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$-825M NZ$-1.200M NZ$-1035M NZ$-1.079M
Exports - M/M percent change -0.5% -10.6% -11.1%
Exports - Y/Y percent change 2.0% 5.6% 5.0%
Imports - M/M percent change 2.6% -2.8% -2.3%
Imports - Y/Y percent change -1.3% 19.2% 19.8%

September merchandise trade deficit was NZ$1.2 billion. Goods exports were down 0.5 percent on the month but up 2.0 percent from a year ago. Imports added 2.6 percent on the month but sagged 1.3 percent on the year.

The 2014/15 beef export season (October to September) ended on a new high of NZ$3.2 billion, up 41 percent, compared with the previous season. Over half of all beef exports went to the United States with the quantity up 21 percent to 228,814 tonnes. Milk powder, butter and cheese (New Zealand's largest export commodity group) declined 22 percent. The quantity exported in September 2015 was down 6.7 percent compared with September 2014. Milk powder, butter and cheese exports to China fell 30 percent. Exports to other countries also fell, including the United States, Netherlands, Malaysia and Saudi Arabia.

Monthly imports were down 1.3 percent from September 2014. Excluding large import items in September 2014, such as aircraft, imports in September 2015 increased 8.1 percent and were the highest-ever monthly value. Of the three main broad economic categories, consumption and intermediate goods increased in value, while capital goods decreased in value compared with September 2014.

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.