Increases in imports of petroleum and products, cars and fertiliser helped create a NZ$186 million deficit in July, Statistics New Zealand says, the first monthly deficit of the 2010 year.
Statistics New Zealand said merchandise exports rose NZ$394 million, or 12%, to NZ$3.6 billion in July.
(Updated with comments from JP Morgan economist Helen Kevans).
Growth was led by exports of milk powder, butter, and cheese, with exports of pleasure boats and pinus radiata-based commodities also providing a boost.
Merchandise imports rose NZ $402 million, or 12%, to NZ$3.8 billion.
Increases in petroleum and products, passenger cars, and fertiliser led the increase.
The trade deficit was NZ$186 million, or 5.2% of the value of exports. This was significantly worse than the NZ$40 million deficit expected by economists.
Statistics New Zealand said as with July 2009 the monthly deficit was much lower than the average July deficit for the five years before July 2009, which was 24% of total exports.
JP Morgan Chase Bank economist Helen Kevans noted July was the first month this year the trade balance had been in deficit. She said this was due to a sharper than expected rise in imports, which were up 5% month-on-month while exports were down 6% month-on-month.
Kevans said, however, the year-to-date trade balance remained in surplus for a fourth straight month suggesting healthy export revenues were offsetting softer domestic demand. At NZ$573 million, the year-to-date surplus was slightly down on the NZ$581 million balance recorded in June.
Kevans said the trade balance was likely to return to surplus in coming months as the trend for imports appeared to be flattening with exports "meandering" higher. Demand from Australia and China, especially, was likely to underpin export growth. Exports to Australia recorded the largest increase in July, rising NZ$96 million, or 13%, year-on-year. Exports to China rose NZ$90 million, or 30%.
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