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New Zealand’s merchandise terms of trade improved almost 6% in the December quarter from the previous quarter, data out from Statistics NZ today shows.

In fact, the increase in the terms of trade was the largest since 1976 and followed six consecutive quarterly falls. Year-on-year, however the index was down more than 8%, as those previous declines accumulated.

The terms-of-trade index measures the amount of imports a fixed amount of exports will purchase.

Economists generally were expecting a much smaller improvement, more in the range of 2-3%. In the December quarter, a rising NZ$ tended to reduce the price of both imports and exports, but stronger world prices for our commodities helped boost the merchandise terms-of-trade.

The falls in the prices of imports were primarily driven by mechanical machinery (down 8.6%) and electrical machinery and apparatus (down 10%). Petroleum products were also down 4.3%.

In contrast, prices for exported goods fell only marginally in the December 2009 quarter.

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The merchandise trade balance for January 2010 was a surplus of $269 million, Statistics New Zealand said today. (Update 1 includes ASB economist comment).

“As a percentage of exports this is the biggest trade surplus for a January month since 1989,” a spokesperson said. “Until this year, deficits had been recorded for the previous eight January months.”

Exports for January were $3.2 billion, down $19 million compared with January 2009, while imports were $2.9 billion, down $390 million.

The main commodities contributing to the fall in imports were automotive diesel (down $105 million); mechanical machinery and equipment (down $102 million); and electrical machinery and equipment (down $79 million). Crude oil (up $106 million) was the main commodity to show an increase.

Results for exports were mixed, with 24 of the top 40 export commodities recording decreases for the January 2010 month.

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New Zealand posted a trade surplus of NZ$2 million in December, the first monthly surplus since May, after imports fell 18.6% in the month from a year ago and exports fell 11.3% from a year ago, Stats NZ data shows.

Exports for the December quarter fell 2.8% to NZ$9.2 billion from the September quarter, the fourth consecutive quarterly fall. Imports fell 3.2% in the quarter to NZ$9.4 billion, the fifth consecutive quarterly decline. This left a quarterly trade deficit of NZ$170 million or 1.8% of exports, which was the lowest deficit since the March quarter of 2009.

Dairy exports fell 10.1% by value in the quarter and 6.1% by volume, while imports of capital goods for investment by businesses fell 11.1% in the quarter as businesses bought less machinery and equipment.

Consumption imports fell 3.6% in the quarter, mostly in semi-durable and non-durable goods such as clothes, shoes, food and beverages. Passenger car imports rose 26.8%.

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The value of New Zealand’s exports and imports in November continued to fall from the year before as the trade balance remained in deficit, figures released by Statistics New Zealand show. However, the deficit in November represented only 8.8% of exports compared to an average November deficit of 27.6% of exports for the previous five years. (Update 1 includes economist comment.)

Export values in November were down 16.7% from the year before, while import values were down 22%. November was the eighth consecutive month in which the value of imports had fallen and the sixth consecutive month in which exports had fallen compared with the same month of the previous year, Stats NZ said.

The value of New Zealand’s largest export category, milk powder, butter, and cheese, fell 24.9% from November 2008. The fall was led by unsweetened whole milk powder, despite export quantities rising 48%, Stats NZ said.

New Zealand’s trade balance was a deficit of NZ$269 in November, less than half of what it was in November 2008 and up from a deficit of NZ$495 million in October. The trade balance was positive between February and May 2009, before crashing to a deficit of NZ$717 million in August. However, since then, export values rose almost 12%, while import values remained relatively stationary.

Despite this, the trend series for exports (which takes out seasonal fluctuations) remained negative in November, although it did ease from October. The falling trend in imports eased to stationary in November from October.

ASB economist Jane Turner said import demand was likely to pick up as the economy begins to recover, limiting further improvements in the trade deficit.
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Watch video on YouTube here.

Watch on our video page here.

Bernard Hickey delivers an economic weather report in association with ASB, including a look at trade figures showing imports falling slightly faster than exports in October from a year ago. This means our trade deficit improved in October, but its turnaround earlier this year has run out of steam.

Exports of dairy products, oil and aluminium fell from October 2008 as New Zealand dollar prices fell, partly because of a stronger New Zealand dollar. Imports of cars, machinery and fertiliser fell, suggesting business investment is weak. Oil imports were also down because of lower oil prices.

Exports to China, however, are up over 50% in the last year from a year ago, while imports from China are up only slightly, suggesting the Free Trade Agreement has been a big success.

New Zealand’s merchandise trade deficit contracted to NZ$487 million in October from NZ$994 million a year ago as both import and export values continued to trend downward, Statistics New Zealand said. (Update 3 includes video links.)

The October 2009 trade deficit represented 16.4% of exports, which was below an average of 30% of exports for the previous five years, Stats NZ said.

Trend values based on seasonally adjusted figures showed the trade balance fell into negative territory in October, with a deficit of NZ$23 million from a surplus of NZ$13 million in September. Seasonally adjusted exports (down 1.3%) fell more than imports (down 0.1%) over the month.

See Bernard Hickey’s commentary on the export and import figures on YouTube here, and on our video page here.

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