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NZ August trade deficit tad wider than expected on more imports

Wednesday 25th September 2019

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New Zealand’s August trade deficit was $1.6 billion, slightly wider than economists had expected, as imports came in higher than forecast.

Economists polled by Bloomberg had expected a monthly deficit of $1.4 billion and an annual deficit of $5.4 billion. The annual deficit came in at $5.48 billion, Stats NZ said.

Exports rose 3.8 percent, or $151 million, to $4.1 billion in August from a year earlier. Imports, meanwhile, rose $149 million, or 2.7 percent, to $5.7 billion.

Economists had expected exports of $4.1 billion but imports of $5.58 billion. "Higher than expected petroleum import values accounted for much of the surprise versus our forecast," said ASB Bank's rural economist Nathan Penny. 

The lift in imports was led by a rise in intermediate goods, including crude oil, aircraft parts and fertilisers.

Imports from China rose 4.9 percent to $1.1 billion in August. They are up 11 percent in the 12 months ended August at $13 billion. Imports from Australia, New Zealand’s second-largest trading partner, lifted 5.2 percent to $704 million on the month.

On the export side of the ledger, the leading contributor to the rise was crude oil exports, up $58 million at $68 million.

The increase was due to low quantities of crude oil exported in August 2018. Exports of crude oil fluctuate from month to month and can mean large rises or falls in monthly values, Stats NZ said.

Fruit exports lifted 18 percent to $371 million, with gold kiwifruit up $26 million, or 18 percent in value and 15 percent in quantity. Apple exports rose $23 million, or 63 percent in value and 41 percent in quantity.

Preparations of milk, cereals, flour, and starch rose $49 million to $202 million. This commodity group includes infant formula.

Milk powder, butter, and cheese rose $32 million or 6.2 percent to $547 million. August is typically the lowest month for exports of this commodity group.

Penny still expects the annual trade balance to narrow as New Zealand's food export value growth remains firm. "Notably, NZ food exports remain relatively healthy despite softening global growth," he said. 

In the other direction, liquefied natural gas exports fell $73 million. There were no exports of this commodity this month.

Untreated logs fell $51 million, or 17 percent in value and 4.1 percent in quantity.

Exports to China lifted 13 percent to $1 billion, led by beef, kiwifruit and milk powder.

Exports to Australia lifted 6.8 percent to $801 million, led by rises in crude oil.


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