NZ terms of trade rise 1.3% in 2Q, as weaker kiwi helps bolster exports

Tuesday 1st September 2015

New Zealand's terms of trade unexpectedly rose in the second quarter as a slide of almost 10 percent in the kiwi dollar helped lift prices of exports such as dairy products.

The terms of trade rose 1.3 percent in the three months ended June 30 compared with the first three months of the year, and were down 4.4 percent from the second quarter of 2014, according to Statistics New Zealand. Economists had expected a decline of 1.9 percent in the latest quarter compared with three months earlier, based on a Reuters poll.

Export prices rose 2.1 percent and volumes declined 0.2 percent, while import prices rose 0.7 percent and import volumes dropped 0.4 percent.

Export dairy prices rose 6 percent in the June quarter, after four straight quarters of decline, which the government statistician attributed to a weaker currency. It also noted that contract prices tend to be agreed in overseas currencies such as the greenback ahead of the products being shipped overseas. Dairy volumes declined 4 percent. Excluding dairy, export prices fell about 0.1 percent.

Meat export prices fell 1.9 percent in the latest quarter and volumes dropped 4.2 percent, led by beef and lamb. Prices of forest product exports fell 5.8 percent while volumes rose 1.9 percent. Within forest products, wood contributed the most to the decline in prices, falling 8.9 percent, while for volume, wood pulp fell the most, down 10 percent.

Petroleum prices contributed most to the increase in import prices, gaining 4.1 percent, while volumes jumped 18 percent to the highest level since the series began in 1971. Activity was affected by a shutdown at the Marsden Point refinery. Prices of imported intermediate goods rose 1.9 percent and the volume declined 3.2 percent, while consumption goods prices rose 0.2 percent and volume gained 8.9 percent.

Among other goods, the volume of cars rose 18 percent while prices fell 0.5 percent.

Terms of trade for services fell 2.6 percent in the quarter from three months earlier, as prices for exports such as transportation services fell 1.5 percent and import prices rose 1.2 percent.

BusinessDesk.co.nz

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