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NZ imports rise in 'preferred' areas

Monday 27th June 2011

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Rising imports of plant and machinery are bolstering hopes the economy is continue to rebalance in a more sustainable direction.

Figures from Statistics New Zealand today showed exports in May were $429 million -- or 10 percent -- higher than a year earlier at $4.6 billion, while imports were up $594 million -- or 17 percent -- from May 2010 to $4 billion.

May had a trade surplus of $605m, or 13 percent of the value of exports, compared to an average May surplus of 6.7 percent in the previous five years. Excluding a one-off import of aircraft parts, valued at $214m, the surplus would have been $819m or 18 percent of the value of exports.

For the year to May the trade balance was a surplus of $1.1b or 2.3 percent of exports, compared to an average deficit of 11 percent of exports.

BNZ senior economist Craig Ebert said imports had been greater than expected by the market, but the growth was mainly in the preferred areas of capital and industrial goods, with a pick-up in consumer goods imports lagging.

That, along with another decent enough result for exports in May was good news regarding ongoing rebalancing of the economy, Ebert said.

Imports of plant and machinery, excluding transport goods, were up 21 percent from a year before, while industrial supplies, excluding oil, expanded nearer 30 percent year-on-year.

Oil imports were also up about 30 percent for the year, but that was mainly owing to volumes rather than fuel prices.

"So, overall, the imports detail was chipper in what it implied for business investment and industrial activity. Imports of consumer goods were lagging, although they were still growing on an annual basis," Ebert said.

Goldman Sachs economist Philip Borkin said a seasonally adjusted 8.1 percent fall in export values from a record level in April was mainly driven by a month-on-month 18 percent fall in milk powder exports entirely led by lower volumes.

Falls were also recorded by meat, electrical machinery, aluminium and wine exports.

Perhaps that weakness was a sign the support from a strong end to the dairy production season had run its course, Borkin said.

At a time of a near post-float high for the New Zealand dollar against the greenback, the latest figures showed the considerable benefit record high commodity prices were providing.

NZPA



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