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Higher oil costs drive record monthly trade deficit

Thursday 25th October 2018

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Fuel and crude oil imports drove the largest-ever monthly goods trade deficit in September and the widest annual deficit in more than nine years. 

The September deficit was $1.6 billion, Statistics New Zealand said. Economists surveyed by Bloomberg had expected a deficit of $1.4 billion. The annual deficit was $5.2 billion versus an expected $5 billion. It was the widest annual deficit since January 2009. 

September imports rose 19 percent to $5.9 billion, the highest value for total imports on record. Exports were up 14 percent to $4.3 billion. 

The New Zealand dollar was largely unmoved on the data, trading at 65.19 US cents at 11:15am in Wellington from 65.22 at 8am. 

Stuart Ive, senior dealer foreign exchange at OMF in Wellington, said the "devil is in the detail" of the data. The market wasn't surprised by the sharp rise in fuel and crude oil imports as well as one-off aircraft parts and therefore didn't react to the headline number. 

The rise in imports was driven by petroleum and products, up $366 million or 87 percent on the year, Stats NZ said. The increase was led by a $278 million lift in crude oil and a $86 million lift in fuels. 

“This month’s record imports continue the high values seen since May 2018,” international statistics manager Tehseen Islam said. "The monthly imports value has been more than $5 billion for the past five months, in part reflecting high prices for imported fuel and crude oil." 

The increase in crude oil import values this month reflected higher prices as volumes fell 1.9 percent from September 2017. 

Aircraft and parts rose $266 million or 449 percent to $325 million.

The leading contributor to the rise in total exports was fruit, up 118 percent to $347 million. Also contributing to the rise in exports were forestry products, up 19 percent to $466 million, and meat and edible offal which was up 20 percent to $367 million. 

Milk powder, butter, and cheese exports fell $32 million or 4.1 percent to $759 million.


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