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NZ terms of trade rise 0.9% to 37-year high

Thursday 2nd June 2011

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New Zealand's terms of trade hit a 37-year high in the March quarter, boosted by higher dairy and meat export prices.

The merchandise terms of trade rose 0.9%, meaning 0.9% more imported goods could be funded by a fixed quantity of exported goods than in the December quarter, Statistics New Zealand (SNZ) said.

Merchandise export prices rose 6.3% in the March quarter, with dairy prices up 5.5% and meat up 10%, forestry products up 4.2% and wool up 12%.

Prices for imported goods rose 5.4% in the March quarter with petroleum and petroleum products contributing half of the overall increase. Excluding petroleum and petroleum products, import prices rose 2.7% in the quarter.

The rise in the terms of trade was smaller than expected, with the median forecast in a Reuters poll having been for a rise of 2.2%, with the rise in import prices much higher than the 2% predicted, while export prices also beat expectations but by a smaller amount.

SNZ prices manager Chris Pike said seasonally adjusted dairy export volumes rose 7.6% in the March quarter, reaching their highest level since the series began in 1990.

Seasonally adjusted export volumes fell 0.3% but remained at historically high levels, following a 4% rise in the December 2010 quarter.

Meat, non-fuel crude materials, and fruit and vegetables were all major contributors to the overall fall in export volumes. Dairy, petroleum and petroleum products, and forestry provided notable offsetting increases.

Seasonally adjusted import volumes rose 5.1% in the March quarter, the seventh consecutive quarterly rise.

Total import volumes were 21.5% higher than the most recent low reached in the June 2009 quarter, but were still 1.8% lower than their June 2008 quarter peak, SNZ said.

Intermediate goods - used as inputs in producing other goods - and consumption goods were the main contributors to the rise in import volumes in the March quarter.



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