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NZ exports rise to record $4.2 bill

Friday 25th June 2010

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New Zealand’s exports rose to a record in May, led by dairy products, crude oil and forest products, contributing to the nation’s fifth straight monthly trade surplus. 

Exports rose 6% to $4.2 billion last month and imports climbed 10.8% to $3.4 billion, resulting in a trade surplus of $814 million, according to Statistics New Zealand.

The annual surplus shrank to $91 million from $182 million in the 12 months through April. 

A monthly surplus of $870 million and an annual $130 million was expected, according to a Reuters survey. 

The data tallies with other signs that overseas sales of primary sector products from milk powder to logs have been advancing at a cracking pace.

Terms of trade showed the biggest increase in 34 years in the first quarter, as prices of dairy products soared 32%.

Reserve Bank Governor Alan Bollard noted “very strong” export receipts, which will “substantially boost primary sector incomes over the coming year,” when he raised interest rates for the first time in three years. 

“The strong trade surplus has been one of the key drivers in the dramatic narrowing of the current account deficit over the past year,” said Jane Turner, economist at ASB. “Stronger export incomes will be a key contributor to the economic confidence and recovery over the next year.” 

While the recovery in export prices is partly a result of better global demand, and is likely to be sustained over the next few years, particularly for forestry, strength in dairy prices is a result of tight market conditions, which will abate, she said. 

The New Zealand dollar recently traded at 70.73 US cents, little changed from 70.74 cents immediately before the report was released. 

The trade figures showed exports of milk powder, butter and cheese rose 12.6% to $909 million in May from the same month of 2009. Meat and offal edged up 0.1% to $580 million and forest products jumped 19.5% to $269 million.

Crude oil exports soared 44.5% to $230 million. Imports of petroleum products jumped 46% to $531 million, mechanical machinery fell 3.5% to $407 million and vehicles and parts climbed 47% to $353 million. 

Exports to Australia rose 18% to $919 million in May from a year earlier, while sales to China climbed 26% to $451 million and shipments to the U.S. grew 5.9% to $422 million. Exports to Japan rose 46% to $356 million while sales to the U.K. fell 13% to $$154 million.

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