NZ: Merchandise trade

Thu Nov 23 15:45:00 CST 2017

Consensus Actual Previous Revised
Merchandise trade Balance - level NZ$-600M NZ$-871M NZ$-1,143M NZ$-1,156M
Exports - Y/Y percent change 16.2% 9.0% 8.9%
Imports - Y/Y percent change 15.0% 1.4% 1.6%
Exports - M/M percent change 4.9% 4.2% 3.8%
Imports - M/M percent change 7.1% 4.9% 5.1%

New Zealand's merchandise trade balance deficit narrowed to NZ$871 in October from NZ$1,156 million in September, larger than the consensus forecast for a deficit of NZ$600 million. New Zealand's trade deficit in October has averaged NZ$909 million over the last five years.

Exports rose 16.2 percent on the year in October, up from growth of 8.9 percent in September. Exports of dairy products recorded another month of strong growth, up 22 percent on the year, despite lower volumes in some products. Meat exports also rose by 20 percent on the year, offset by a 41 percent drop in the value of fruit exports. Exports to China and Australia rose 35 percent and 17 percent on the year respectively in October. Using seasonally adjusted data, New Zealand's exports advanced 4.9 percent in October, up from growth of 3.8 percent in September.

Imports of goods increased by 15.0 percent on the year in October, accelerating from growth of 1.6 percent in September. This increase in headline imports growth reflects stronger imports of crude oil and mechanical machinery. Using seasonally adjusted data, New Zealand's goods imports rose 7.1 percent on the month in October after an increase of 1.6 percent in September.

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.