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NZ trade deficit narrows in October as dairy exports increase

Friday 25th November 2016

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New Zealand's monthly trade deficit narrowed in October as an improving global dairy market buoyed exports of dairy products.

The country's trade deficit was $846 million in October, from $1.4 billion last month and $905 million in October last year, Statistics New Zealand said. The annual trade gap narrowed to $3.297 billion from $3.356 billion in September.

New Zealand's exports in October advanced 2.2 percent to $3.9 billion, led by a 13 percent jump in the value of dairy product exports to $1.06 billion. The global dairy market is recovering after a prolonged slump in prices prompted farmers to pull back production, helping rebalance supply and demand for New Zealand's largest agricultural commodity. Also helping buoy exports in the month, fruit shipments lifted 40 percent to $147 million, while wood exports rose 25 percent to $367 million. Offsetting the gains, meat exports declined 18 percent to $315 million due to falls in beef and lamb, pushing meat down to third place in the monthly rankings behind wood.

"Dairy exports lifted in October, led by higher prices," ASB senior economist Jane Turner said in a note. "Fruit and forestry also performed very well. Meat exports, although up in October on a seasonally-adjusted basis, do appear to be weakening on a trend basis and are below year-ago levels."

Meanwhile, imports in the month advanced 0.6 percent to $4.74 billion, boosted by the importation of an aircraft in the month, which saw imports of aircraft goods jump to $373 million from $38 million a year earlier.

Imports of vehicles, parts and accessories, the largest category, rose 14 percent to $670 million. Mechanical machinery and equipment, the second-largest category, dropped 16 percent to $584 million, while electrical machinery and equipment slid 8.4 percent to $402 million.

On an annual basis, exports declined 0.5 percent to $48.67 billion in the year through October, compared with the same period a year earlier, while imports slid 0.3 percent to $51.97 billion.

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