23 Dec 2015
NZ trade deficit: Dairy volume surge offset by aircraft - ANZ
FXStreet (Delhi) – Mark Smith, Senior Economist at ANZ, notes that a $779m trade deficit was recorded in November for NZ, which was in line with market expectations (-$810m).
Key Quotes
“Both export and import values were stronger than expected. In seasonally adjusted terms, the deficit printed at $524m, which is the ninth deficit recorded so far in 2015. The annual trade deficit widened to $3.68bn, the largest in 6½ years.”
“Seasonally adjusted export values rose 2.9% m/m (-3.5% 3m/3m), the first gain in three months. Dairy values surged 9.5% m/m, helped by a 12.6% climb in export volumes. Increases in export values were also evident for most commodity exports, including meat (+6.1% m/m) and forestry (+2.2%), partly offset by sharp falls in (volatile) oil exports. The high NZD/AUD continued to weigh on manufacturing exports, with non-primary manufacturing export values down 2.4% m/m.”
“Import values surged 5.8% in seasonally adjusted terms (-2.3% 3m/3m). The import of an aircraft boosted the import bill by $276m. Core capital goods imports ($806m sa) declined 13%, but remain reasonably elevated in historical terms. Imports generally continued to show a degree of resilience, which is likely due to a combination of a still reasonable domestic demand backdrop and “J-curve” type forces (where the lower NZD initially pushes up the cost of imports before volumes adjust), although lower oil prices continued to sharp falls in crude oil and petrol imports.”
“Recent softness in export commodity prices and weaker agricultural production look set to further weigh on export returns, although the impact of low global oil prices will partly offset the hit to the trade balance. In the absence of a turnaround in the terms of trade, the key to avoiding a blowout in our external balances will be a scaling back in household borrowing and ongoing fiscal restraint.”
Key Quotes
“Both export and import values were stronger than expected. In seasonally adjusted terms, the deficit printed at $524m, which is the ninth deficit recorded so far in 2015. The annual trade deficit widened to $3.68bn, the largest in 6½ years.”
“Seasonally adjusted export values rose 2.9% m/m (-3.5% 3m/3m), the first gain in three months. Dairy values surged 9.5% m/m, helped by a 12.6% climb in export volumes. Increases in export values were also evident for most commodity exports, including meat (+6.1% m/m) and forestry (+2.2%), partly offset by sharp falls in (volatile) oil exports. The high NZD/AUD continued to weigh on manufacturing exports, with non-primary manufacturing export values down 2.4% m/m.”
“Import values surged 5.8% in seasonally adjusted terms (-2.3% 3m/3m). The import of an aircraft boosted the import bill by $276m. Core capital goods imports ($806m sa) declined 13%, but remain reasonably elevated in historical terms. Imports generally continued to show a degree of resilience, which is likely due to a combination of a still reasonable domestic demand backdrop and “J-curve” type forces (where the lower NZD initially pushes up the cost of imports before volumes adjust), although lower oil prices continued to sharp falls in crude oil and petrol imports.”
“Recent softness in export commodity prices and weaker agricultural production look set to further weigh on export returns, although the impact of low global oil prices will partly offset the hit to the trade balance. In the absence of a turnaround in the terms of trade, the key to avoiding a blowout in our external balances will be a scaling back in household borrowing and ongoing fiscal restraint.”