NZ records trade surplus in May after exports rise 10.2% to NZ$4.6 bln while imports rise 17.3% to NZ$4.0 bln

Statistics New Zealand has reported New Zealand's trade surplus in May was NZ$605 million, which was down from surplus of NZ$770 million in May a year ago and below market expectations for a surplus of around NZ$1 billion.

The New Zealand dollar fell to 80.2 USc from 80.7 US on the weaker than expected figure.

Exports rose 10.2% from the same month a year ago while imports rose 17.3%, although this included one-off imports of aircraft parts worth NZ$215 million.

The seasonally-adjusted trade balance was a deficit of NZ$169 million, which follows the better than expected seasonally adjusted surplus of NZ$439 million in April.

"The weaker trade balance was a due to a sharp drop in dairy export volumes, a spike in oil imports and the import of aircraft parts," ASB economist Jane Turner said.

"Beyond these volatile components, the trend for solid trade surpluses remains intact. Both commodity and manufactured exports continue to perform very well, and highlight the export-led nature of the NZ economic recovery," Turner said.

"However, cautious behaviour towards debt from both the rural and household sector continues to see domestic demand remaining relatively subdued."

BNZ economist Stephen Toplis said the headline surplus was less than expected, but this was mainly because of capital goods imports and consumer goods imports had lagged.

"This, along with another decent enough result for exports in May, is good news regarding ongoing rebalancing of the NZ economy, with reasonable GDP expansion implied underneath," Toplis said.

Here is more detail below from Statistics NZ and on its website.

For the month of May 2011, compared with May 2010: Merchandise exports were up $429 million (10 percent) to $4.6 billion. Ships, boats, and floating structures had the largest increase, up $99 million. Merchandise imports were up $594 million (17 percent) to $4.0 billion. The increase in imports was led by petroleum and products, up $204 million. There was a trade surplus of $605 million, or 13 percent of the value of exports.

The trend for exports has increased 30 percent since the most recent low point in September 2009. The trend for imports has increased 22 percent over the same period. In the May 2011 month, merchandise exports were valued at $4.6 billion, up $429 million (10 percent) from May 2010. In the May 2011 month, compared with the May 2010 month, key increases and decreases in the value of exports by commodity and by country of destination were as follows:

By commodity: Ships, boats, and floating structures had the largest increase, up $99 million. This was mainly due to the export of pleasure boats in May 2011. The milk powder, butter, and cheese commodity grouping had the second-largest increase, up $73 million (8.0 percent). Significant contributors were sweetened skimmed milk powder (up $17 million), unsalted butter (up $16 million), and anhydrous milk fat (up $14 million). Meat and edible offal had the third-largest increase, up $72 million (12 percent). This was led by frozen lamb cuts (up $43 million), with frozen beef cuts (up $16 million) also contributing to this increase.

Logs, wood, and wood articles had the next-largest increase, up $59 million (22 percent). This was led by an increase in pinus radiata logs, partly offset by a decrease in sawn and chipped pinus radiata. Wood pulp and waste paper had the largest decrease, down $22 million (29 percent).

The People’s Republic of China recorded the largest increase, up $109 million (24 percent) across a range of commodities. Significant contributors were pinus radiata logs (up $51 million); fish, crustaceans, and molluscs (up $22 million); and frozen lamb cuts (up $15 million). These were slightly offset by a $13 million decrease in milk powder, butter, and cheese.

The Marshall Islands had the second-largest increase, up $95 million. This was due to the export of pleasure boats in May 2011. Exports to Australia increased $43 million (4.7 percent). Significant contributors were crude oil (up $15 million) and mechanical machinery and equipment (up $9 million).  The Republic of Korea had the next-largest increase, up $33 million (23 percent) across a range of commodities.

Exports to Algeria increased $32 million, led by rises in anhydrous milk fat (up $15 million) and unsweetened whole milk powder (up $13 million).

Japan recorded the largest decrease, down $28 million (8.0 percent). Decreases in crude oil (down $31 million), and wood pulp and waste paper (down $12 million) were partly offset by an increase in kiwifruit exports (up $19 million).

In the month of May 2011, merchandise imports were valued at $4.0 billion, up $594 million (17 percent) from May 2010.

The three main broad economic categories – intermediate, capital, and consumption goods – increased in value in May 2011 compared with May 2010. Passenger motor car imports decreased in the latest month. The intermediate goods category recorded the largest increase, up $482 million (30 percent). The increase was led by parts and accessories for transport equipment (up $255 million), mainly due to the one-off import of aircraft parts valued at $214 million. Crude oil was also a major contributor, up $118 million (32 percent).

Crude oil is imported in large, irregular shipments, which can cause large percentage fluctuations in the series. Capital goods increased $65 million (11 percent), due to an increase in machinery and plant, up $97 million (21 percent). There were increases for several commodities, led by cranes, mobile phones, and tractors. Partly offsetting the machinery and plant rise was a fall in transport equipment, down $33 million (28 percent).

Consumption goods also increased, up $41 million (4.8 percent), led by processed food and beverages. Petrol and avgas, up $28 million (24 percent), and military and other goods, up $23 million (90 percent), also recorded increases. Passenger motor cars recorded a decrease, down $47 million (18 percent). This was mainly due to a fall in new petrol motor cars with an engine capacity of 1500–3000cc.

(Updates with ASB economist reaction, BNZ economist reaction, NZ$ reaction and interactive charts below)