NZ: Merchandise trade

Thu Apr 26 17:45:00 CDT 2018

Actual Previous Revised
Merchandise trade Balance - level NZ$-86M NZ$217M NZ$172M
Exports - M/M percent change -2.6% 2.5% 2.3%
Exports - Y/Y percent change 5.8% 11.1% 10.4%
Imports - M/M percent change 5.3% -5.5% -5.0%
Imports - Y/Y percent change 14.1% 4.6% 5.0%

New Zealand's merchandise trade balance swung from a revised surplus of NZ$172 million in February to a deficit of NZ$86 million in March. Exports recorded weaker growth while imports growth strengthened relative to February. These figures, however, are impacted by an infestation on four cargo ships that prevented the importation of around 8,000 motor vehicles in February that are included in March import data.

Exports grew 5.8 percent on the year in March, slowing from revised growth of 10.4 percent in February. Exports of dairy products rose 11.0 percent on the year in March, while forestry exports also recorded strong growth. Exports to China fell on the month but remain strong in year-on-year terms, with the timing of lunar new year holidays in China likely impacting growth rates. Using seasonally adjusted data, New Zealand's exports fell 2.6 percent on the month in March, weakening from a increase of 2.3 percent in February.

Imports of goods rose by 14.1 percent in March, accelerating from revised growth of 5.0 percent in February. This pick-up in growth was largely driven by stronger fuel imports, up 23.6 percent on the year, but also partly reflects the impact of stronger growth in motor vehicle imports as the imports impacted by the cargo ship infestations were recorded. Using seasonally adjusted data, New Zealand's goods imports rose 5.3 percent on the month in March after dropping 5.0 percent in February.

In quarterly terms, New Zealand recorded a trade deficit of NZ$1.8 billion in the three months to March, the largest deficit since 2008. Goods exports fell 5.8 percent on the quarter after increasing 7.1 percent in the three months to December, reflecting declines in the value of dairy exports and the value and volume of meat exports. Goods imports fell slightly by 0.1 percent on the quarter after an increase of 12.0 percent previously, with declines in imports of capital goods and cars offsetting strong growth in fuel imports.

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.