NZ: Merchandise trade

Tue Dec 19 15:45:00 CST 2017

Actual Previous Revised
Merchandise trade Balance - level NZ$-1193M NZ$-871M NZ$-843M
Exports - M/M percent change -0.5% 4.9% 4.5%
Exports - Y/Y percent change 19.6% 16.2% 16.1%
Imports - M/M percent change 4.7% 7.1% 6.3%
Imports - Y/Y percent change 26.7% 15.0% 14.3%

New Zealand's merchandise trade balance deficit widened to NZ$1,193 million in November from a revised NZ$843 in October.The increase in the deficit largely reflected the purchase of a large aircraft which boosted headline imports signficantly. New Zealand's trade deficit in November has averaged NZ$447 million over the last five years and this is the first time the deficit has exceeded NZ$1.0 billion in November since 2005

Exports rose 19.6 percent on the year in November, up from 16.1 percent in October and growing at the fastest pace in nearly four years. Strong dairy prices were the main factor pushing up headline growth, with the value of dairy exports up around 22 percent on the year in November despite declines in the volume of butter and milk powder exports. Exports of meat and forestry products also recorded strong growth, up around 47 percent and 50 percent on the year respectively. Using seasonally adjusted data, however, New Zealand's exports fell 0.5 percent on the month after an increase of 4.5 percent in October.

Imports of goods increased by 26.7 percent on the year in November, accelerating sharply from growth of 14,3 percent in October. This was the strongest year-on-year growth in imports since 1999 but was boosted in large part by a one-off purchase of a large aircraft. Other categories of imports however, also recorded strong growth, including an 18 percent year-on-year increase in imports of vehicles, parts and accessories. Using seasonally adjusted data, New Zealand's goods imports rose 4.7 percent on the month in November after an increase of 6.3 percent in October.

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.