NZ: Merchandise trade

Thu Apr 27 17:45:00 CDT 2017

Actual Previous Revised
Merchandise trade Balance - level NZ$332M NZ$-18M NZ$-50M
Exports - Y/Y percent change 10.6% -5.5% -5.4%
Imports - Y/Y percent change 7.6% 4.0% 4.8%
Exports - M/M percent change -3.6% -2.8% -2.8%
Imports - M/M percent change -4.6% 0.1% 0.7%

New Zealand's merchandise trade balance moved to a surplus of NZ$332 million in March from a revised deficit of NZ$50 million in February (previously estimated at NZ$18 million). This shift in the trade balance was partly driven by stronger exports of dairy and meat products but also by a large drop in crude oil imports caused by the closure of a major domestic oil refinery for three weeks for maintenance works.

The March trade surplus is the first monthly trade surplus since June 2016 but is somewhat smaller, as a share of total exports, than the average surplus in March for the last five years. Using quarterly seasonally-adjusted data, New Zealand recorded a trade deficit of NZ$1.4 billion for the three months to March, up from a deficit of NZ$1.1 billion for the three months to December.

Exports rose 10.6 percent on the year in March after a drop of 2.8 percent in February. Year-on-year grown in the value of dairy exports accelerated from 4.5 percent in February to 29.0 percent in March, while growth in meat exports also picked up from 4.4 percent to 4.9 percent. Exports to China and Japan recorded strong year-on-year growth of 43.0 percent and 19.0 percent. offset by weaker exports to Australia, the Untied States and the European Union. Using seasonally adjusted data, New Zealand's exports fell 3.6 percent on the month in March after a decline of 2.8 percent in February.

Imports grew by 7.6 percent on the year in March after an increase of 4.8 percent in February. This pick-up in headline growth was mainly driven by imports of consumption goods, which increased 4.2 percent on the year in March, after dropping 8.7 percent in February. Imports of capital goods rose 5.9 percent on the year, little changed from 5.7 percent in February. Imports of intermediate goods, however, posted slower growth, down from 7.0 percent in February to 4.1 percent in March, but this was driven by a large fall in crude oil imports (down 42.0 percent on the year) due to maintenance work on a major domestic oil refinery.

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.