A merchandise trade surplus of NZ$230 million, or 5.8% of exports, in the June month was lower than the NZ$400 million expected, but continued the trend of monthly merchandise trade surpluses since January, figures released by Statistics New Zealand show.
The New Zealand dollar fell about 30 basis points immediately after the news at 10:45am, from 86.41 USc to as low as 86.11 USc.
Meanwhile, quarterly figures show strength in New Zealand exports continued through the June quarter, although economists are warning this could fall off during the second half of the year as demand drops off.
Exports of goods worth NZ$3.969 billion for the June month more than offset imports of around NZ$3.739 billion, both up 4.7% from June 2010, when there was a trade surplus of NZ$221 million.
Exports of milk powder, butter and cheese rose 11.3% from a year ago to NZ$888 million in June, while exports of the second biggest category, meat and edible offal, rose 10.6% to NZ$492 million from June 2010.
There were also large rises in the two biggest import categories, with petroleum and petroleum product imports up 9.3% to NZ$723 million, and mechanical machinery and equipment imports rose 7.6% to NZ$466 million.
In the year to June there was a trade surplus of NZ$1.021 billion, up from NZ$593 million in the year to June 2010.
May not as strong as first thought
May’s trade surplus was revised down by Statistics New Zealand by NZ$54 million to NZ$551 million, which had followed April’s record high of NZ$1.149 billion on the back of strong commodity and manufactured goods exports.
It is expected exports may start to ease in the second half of 2011 as demand from particularly China diminishes, ASB economists said before the figures were released. Commodity prices have shown signs of weakness this month, while a surging Kiwi dollar could also affect export performance, although imports would become cheaper.
Export trend hits new high
Meanwhile, seasonally adjusted quarterly figures released this month show exports of about NZ$12.2 billion in the June quarter up 4.5% from the March quarter, following rises of 3.7% in the previous two quarters.
“The trend for goods exported, which reflects the long-term behaviour in export values, has increased 28% since the September 2009 quarter,” Stats NZ said in a media release.
“The trend in exports has reached a new high, surpassing the previous peak in the March 2011 quarter,” Stats NZ said.
Imports of about NZ$11.8 billion were down 1% from the March quarter, giving a seasonally adjusted trade surplus of NZ$362 million, or 3% of exports, for the June quarter.
Economist reaction
ASB economist Jane Turner said there was cause for concern on the export front as the New Zealand dollar rose against its Australian counterpart and on anecdotes of slowing demand in China:
Strong export commodity prices were a key feature in underpinning the trade surplus over Q2. More recently, dairy prices have been easing over recent months and the appreciation in the NZD has further reduced prices in NZD terms. Meanwhile, the recent lift in the NZD/AUD will take the edge off the strong competitiveness of the NZ manufacturing sector in the Australian market.
Also concerning are anecdotes of slowing demand in China, particularly for raw commodities such as forestry. NZ’s economic recovery has been supported by stronger export incomes over the first half of 2011. However, there are concerns that support for export incomes may wane over the second half of the year, as commodity prices moderate from elevated levels and global growth goes through a soft patch.
We believe these uncertainties will see the RBNZ holding off increasing the OCR until December 2011, by which time the domestic economy will have had more time to recover.
(Updates with ASB comment, NZ$ reaction)
Trade balance, monthly
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12 Comments
Yeah great – but we should first make cows, who don’t shit and piss into the whole NZcountry, NZair and NZwater – otherwise we are stuffed to and you and I have to pay a lot of money for the mess David and SK created all over for China, F... and a few others.
Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.
A couple of figures picked out from the release
Fertiliser imports were up 143% to NZ$51 million in June from the same month a year ago, and up 48.5% in the June quarter from June 2010. Annual figures show fertiliser imports up 32% in the year to June from the year to June 2010.
Imports of capital goods in the year to June showed strength, with machinery and plant equipment imports up 14.9% from the previous year. Over that time imports of transport equipment rose 77.1%. However machinery and plant equipment imports were up only 0.1% in the June month from June 2010.
Of our top 20 export categories, wool exports in the June year were up 29.9% from the year before, the highest annual growth in that top 20.
Exports to our major trading partner Australia fell 1.1% in the June month from a year ago, but were up 5.6% in the June quarter, and 6.8% in the year.
Exports to China rose 1.3% during the month, were up 18.6% in the quarter and 37.2% over the year
Exports to the US in June rose 11.1% during the month due to export of an aircraft, were up 3.9% over the quarter and 10.5% over the year.
That's just great, a healthy trade surplus, thank you record terms of trade, best in a generation, and low imports thanks to a subdued domestic economy.
But wait, what's this? Despite all this the current account is still negative at - 4.2% of GDP or about $8,000,000,000 per year.
The differance is what we are sending to our foreign Lords and Masters as tribute for forty years of spending more than we've earned. And we're still digging the hole we're in deeper every year.
We're already a vassal state to Wall St. yet our politicians are borrowing more and wanting to flog off irreplaceable national assets. How dumb can you get.
Isn't it the case that Labour would get to surplus at the same point as NACT, except they (NZ) would also be left with the revenue from assets they'd not flogged off? Plus, other Labour policy would be more condusive to rebalancing the economy with more sustainable surplus going forward - why wouldn't you want that?
Good idea Keriwin, just don't follow the current model of oveseas miners doing the digging. You only get one shot at mining a resource and to let it happen for pennies in the dollar is completely pointless. The profits flowing to foreign owners is one of the reasons Australia - despite record commodity sales - had a $10.45 billion current account deficit in the three months to the end of March. The large multi national gold miners have a production cost (only a little of which is wages to Kiwi workers) of around $500/oz, with the gold at close to $NZ2,000 thats $1500/oz that flows offshore.
There is probably more upside in, somehow, getting our urban workforce to cut down on the flash cars and overseas holidays and to start doing something useful for a change.
despite world weakness Westpac reckons NZ will go great guns in the next couple of years:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10740936
How small, insignificant and vulnerable are we as an exporting nation that we account for a significant rise in exports to the US because we sold them an airplane. Priced probably in $US terms. Wow! Had the $NZ not been so strong the rise in exports to the US in June would have been 20%+. Our lifeblood as an exporting nation coagulates when the $US is haemmoraging!
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