NZ: Merchandise trade

Wed Oct 25 16:45:00 CDT 2017

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$-975M NZ$-1,143M NZ$-1.234M NZ$-1,179M
Exports - Y/Y percent change 9.0% 9.0% 8.9%
Imports - Y/Y percent change 1.4% 6.5% 5.2%
Exports - M/M percent change 4.2% -20.3% -11.4%
Imports - M/M percent change 4.9% 8.7% -3.7%

New Zealand's merchandise trade balance deficit narrowed to NZ$1,100 million in September from NZ$1,234 million in August, wider than the consensus forecast for a deficit of NZ$900 million. New Zealand's trade deficit in September has averaged NZ$980 million over the last five years.

Exports rose 9.0 percent on the year in September, up slightly from growth off 8.9 percent in August. Exports of dairy products advanced 28 percent on the year, offset by weaker fruit exports, down 30 percent on the year. There was also mixed performance in exports to major trading partners, with exports to China and Japan up 33 percent and 25 percent on the year in September and exports to Australia up a more modest 7.9 percent. This was offset, though, by weaker demand from the United States (down 2.5 percent on the year) and the European Union (down 11 percent). Using seasonally adjusted data, New Zealand's exports advanced 4.2 percent in September, rebounding from a decline of 11.4 percent in August.

Imports of goods increased by 1.4 percent on the year in September, slowing from growth of 5.2 percent in August. This deceleration in headline imports growth reflects a fall in imports of crude oil and aircraft and parts, offsetting increases in imports of mechanical machinery and automobiles. Using seasonally adjusted data, New Zealand's goods imports rose 4.9 percent on the month in September after a decline of 3.7 percent in August.

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.