NZ: Merchandise trade

Mon Sep 25 16:45:00 CDT 2017

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$-750M NZ$-1.234M NZ$85M NZ$99M
Exports - M/M percent change -20.3% 6.7% -1.4%
Exports - Y/Y percent change 9.0% 16.8% 16.7%
Imports - M/M percent change 8.7% 2.0% 1.8%
Imports - Y/Y percent change 6.5% 5.4% 4.9%

August merchandise trade balance plunged to a deficit of NZ$1.2 billion from a surplus of NZ$99 million in July. During the calendar year, August and September typically have large deficits. On the month, exports tumbled 20.3 percent while imports were up 8.7 percent. On the year, exports were up 9.0 percent while imports were up 6.5 percent. Top export destinations included Australia and the European Union.

Fruit had the largest rise of any export commodity group in August 2017, up NZ $70 million (29 percent) to MZ$311 million. Kiwifruit led the rise. Milk powder, butter, and cheese exports fell NZ$12 million (2.6 percent) in value, and 25 percent in quantity. August months are generally lower-value and lower-quantity months for dairy commodity exports. Other key changes in commodity export values for August 2017 were petroleum products (including crude oil) and food preparations (such as infant formula).

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.