NZ: Merchandise trade

Mon Feb 26 15:45:00 CST 2018

Actual Previous Revised
Merchandise trade Balance - level NZ$-566M NZ$640M NZ$596M
Exports - M/M percent change -14.7% 13.0% 14.1%
Exports - Y/Y percent change 9.5% 25.7% 24.3%
Imports - M/M percent change -0.3% -4.5% -4.7%
Imports - Y/Y percent change 17.1% 11.2% 10.8%

New Zealand's merchandise trade balance swung from a revised surplus of NZ$596 million in December to a deficit of NZ$566 in January. This is the largest trade deficit recorded in a January since 2007, reflecting both weaker exports growth and stronger imports growth.

Exports grew 9.5 percent on the year in January, slowing from revised growth of 24.3 percent in December, which had been the fastest growth in more than two years. Dairy exports increased by 8.0 percent on the year, while exports to China fell by 2.1 percent on the year, after both had recorded growth of around 30 percent in December. Meat exports also recorded weaker year-on-year growth in January, while there were zero exports of crude oil in the month for the first time since 2006. Using seasonally adjusted data, New Zealand's exports fell 14.7 percent on the month in January after an increase of 14.1 percent in December.

Imports of goods rose by 17.1 percent in January, up from revised growth of 10.8 percent in December. Headline growth in January reflects a year-on-year increase of 23.4 percent in imports of mechanical machinery and equipment and 6.8 percent of imports of vehicles, parts and accessories. Petroleum imports also rebounded from modest growth in December. Using seasonally adjusted data, New Zealand's goods imports fell 0.3 percent on the month in January after dropping 4.7 percent in December.

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.