NZ: Merchandise trade

Sun Mar 25 15:45:00 CDT 2018

Actual Previous Revised
Merchandise trade Balance - level NZ$217M NZ$-566M NZ$-655M
Exports - Y/Y percent change 11.1% 9.5% 8.9%
Imports - Y/Y percent change 4.6% 17.1% 18.7%
Exports - M/M percent change 2.5% -14.7% -15.9%
Imports - M/M percent change -5.5% -0.3% 0.6%

New Zealand's merchandise trade balance swung from a revised deficit of NZ$655 million in February to a surplus of NZ$217 million in February. Exports recorded stronger growth in February, while imports weakened. These figures, however, were impacted by an infestation on four cargo ships that prevented the importation of around 8,000 motor vehicles that will now be included in March import data.

Exports grew 11.1 percent on the year in February, picking up from revised growth of 8.9 percent in January. Stronger meat exports were the main factor driving the improvement in headline growth, with forestry and dairy products also make solid contributions. After falling on the year in January, exports to China rose 11.8 percent on the year in February, with strong demand from Japan and Korea also boosting grwoth. Using seasonally adjusted data, New Zealand's exports advanced 2.5 percent on the month in February, rebounding from a drop of 15.9 percent in January.

Imports of goods rose by 4.6 percent in February, slowing sharply from revised growth of 18.7 percent in January. This slowdown, however, largely reflects the impact of weaker recorded growth in motor vehicle imports, down around 33.0 percent on the year. This impact will likely be sharply reversed in March when the imports impacted by the cargo ship infestations are recorded. Imports of crude oil also fell 7.8 percent on the year, party offset by solid growth in imports of mechanical machinery and equipment. Using seasonally adjusted data, New Zealand's goods imports fell 5.5 percent on the month in February after increasing by 0.6 percent in January.

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.