NZ: Merchandise trade

July 25, 2016 05:45 CDT

Consensus Actual Previous Revised
Merchandise trade Balance - level 50M 127M 358M 348M
Exports - M/M percent change -6.71% 6.2% 5.5%
Exports - Y/Y percent change 2.63% 5.1% 4.8%
Imports - M/M percent change -2.0% 6.0%
Imports - Y/Y percent change -4.62% 5.7%

June merchandise trade surplus was NZ$127 million, down from a revised NZ$348 million. Exports declined 6.7 percent on the month but were up 2.6 percent from a year ago. Kiwifruit exports 47 percent from June 2015. The June 2016 rise was across all our top kiwifruit export destinations, but particularly Japan and China. Annual exports of all fruit were up 31 percent for the June 2016 year. Apples also contributed to the rise. The rise in fruit exports eclipsed other increases in export commodities for the June 2016 year, including forestry products and meat products.

The increase in fruit also helped to offset a fall in annual exports of milk powder, butter and cheese. Within these dairy exports there were contrasting movements; milk powder was while the values and quantities of butter, cheese and fresh milk and cream exported were all up in the year ended June 2016.

Imports were down 2.0 percent on the month and 4.6 percent from a year ago.

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.