The seasonally adjusted volume of merchandise exports from New Zealand fell 0.3% in the March quarter from the December quarter, while the general price of those exports rose 6.3% over the quarter, figures released by Statistics New Zealand show.
Higher dairy and meat export prices, up 5.5% and 10% respectively, helped lift New Zealand's terms of trade to a 37 year high in the March quarter as the 6.3% rise in export prices trumped a 5.4% rise in import prices from December, Stats NZ said.
The increase in export prices was broad-based, and also included price rises for forestry products (up 4.2%) and wool (up 12.0%), Stats NZ said.
Exchange rates published by the Reserve Bank are used to value exports. The Reserve Bank trade weighted index (TWI) fell 0.8% in the March 2011 quarter. The New Zealand dollar depreciated against all of our five major trading partners' currencies during the quarter, Stats NZ said.
Since the end of March the TWI has appreciated 6.3% to just over 71.
Petrol prices fuel import price rise
In the March 2011 quarter, prices for imported goods rose 5.4%. Petroleum and petroleum products contributed half of the overall increase. Excluding petroleum and petroleum products, import prices rose 2.7% in the March 2011 quarter. A rise in food and beverage prices (up 4.7%) also contributed to the latest rise in import prices.
Dairy export prices and volumes both rose in the March quarter.
“Seasonally adjusted dairy export volumes rose 7.6% in the March quarter, reaching their highest level since the series began in the June 1990 quarter,” Statistics NZ’s prices manager Chris Pike said.
Seasonally adjusted export volumes fell 0.3% in the March 2011 quarter but remained at an historically high level, following a 4.0% rise in the December 2010 quarter, Pike said.
Meat, non-fuel crude materials, and fruit and vegetables were all major contributors to the overall fall in export volumes. Dairy, petroleum and petroleum products, and forestry provided notable offsetting increases, he said.
Seasonally adjusted import volumes rose 5.1% in the March 2011 quarter – the seventh consecutive quarterly rise.
"Total import volumes are 21.5% higher than the most recent low reached in the June 2009 quarter, but are still 1.8% lower than their June 2008 quarter peak. Intermediate goods (used as inputs in producing other goods) and consumption goods were the main contributors to the rise in import volumes in the March 2011 quarter," Pike said.
JP Morgan economist Helen Kevans said the 0.9% terms of trade was higher than the market had expected (0.6%).
"The resulting boost to national income eventually should give a much needed lift growth in 2011," Kevans said.
"The multiplier effects from the income boost so far have been limited, however, as many farmers still are recovering from over-investment in the last commodity price boom. The sharp fall in farm prices since end-2009 has meant that many farmers have used the windfall from the higher terms of trade to reduce debt," she said.
"This has delayed the full pass-through of higher farmer incomes to broader economic activity. But, the focus on balance sheet repair will not continue indefinitely. The sheer size of the income boost, and its positive impact on farm revenues and cash flows, should mean that at least some of the income injection will filter through to the broader economy, particularly amid recent signs that the rural property market has started to stabilise."
(Updates with JP Morgan comments)