NZ: Merchandise trade

Tue Apr 26 17:45:00 CDT 2016

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$400M NZ$117M NZ$339M NZ$367M
Exports - M/M percent change -0.8% 9.2% 8.8%
Imports - M/M percent change 5.5% 0.8% -0.2%
Exports - Y/Y percent change -14.3% 9.3% 9.1%
Imports - Y/Y percent change -3.7% 2.8% 1.8%

March value of exported goods fell 14.3 percent, from a year ago. The fall was led by milk powder, down 42 percent, with the quantity down 41 percent. A large drilling platform worth NZ$199 million that was exported in March 2015 contributed to the fall in export values this month. Other key movements were a $63 million fall in casein and caseinates (down 45 percent), and a NZ$37 million rise in logs, wood & wood articles (up 11 percent). Beef exports (quantities) were down 25 percent while lamb exports were down 11 percent. Despite large declines in the top export commodity groups, the trade balance for the March 2016 month was a surplus of NZ$117 million (2.8 percent of exports), a smaller surplus than in March 2015.

The annual trade balance for March 2016 was a deficit of NZ$3.8 billion, the largest annual trade deficit since April 2009. The large annual trade deficit is a result of drops in the value of primary produce exports.

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.