Fourth straight monthly trade surplus posted as imports tumble

Monday 29th June 2009

New Zealand posted its fourth straight monthly trade surplus as the prolonged recession sapped imports of petroleum and vehicles, while the nation shipped more exports to China.

The trade surplus widened to $858 million in May, from $276 million in April, for a smaller-than-expected annual trade deficit of $3.04 billion, according to Statistics New Zealand.

The surplus in the latest month was more than twice the $350 million forecast in a Reuters survey.

New Zealand’s economy probably shrank for a sixth straight quarter in the three months ending June 30, which is crimping demand for imported goods more than the global economic slump is eroding demand for the nation’s exports.

Figures last week showed the current account deficit shrank to the smallest since 2004 in the first quarter. The economy contracted a greater-than-expected 1% in the first three months of the year, matching the forecast of the central bank, which has vowed to keep interest rates low through the second half of 2010.

“It’s positive that the net trade picture is turning around but not all that positive that domestic support is weak,” said Doug Steel, economist at Westpac Banking Corp. The trade data “isn’t suggesting the economy is coming out of recession. Any recovery is going to be pretty shallow.”

The New Zealand dollar traded at 64.60 US cents after the report was released, from 64.61 cents immediately prior and has surged 31% from its lows in early March, when it fell below 50 cents.

Exports climbed 5.8% in May from the same month of 2008 to $4 billion in May, with shipments to China of milk powder, butter, cheese, logs and wood products accounting for about 80% of the monthly gain.

Total milk powder exports soared 104% compared with May 2008, when output was hampered by drought conditions in dairy farming regions. Exports of crude oil fell 36% while the value of aluminium sent overseas dropped 48%.

The value of merchandise imports fell 21% to $3.1 billion, reflecting a 32% decline in crude oil, a 20% drop in capital goods, which includes aircraft, and a 52% slide in imports of passenger vehicles.

The trade balance in May amounted to 21.7% of the value of exports, the highest level since June 1993. The central bank’s measure of the trade-weighted index of the New Zealand dollar rose 1.9% in May from April and is down 16% from May 2008.

Businesswire.co.nz

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