NZ Trade: Good under the hood – ANZ

Philip Borkin, Senior Economist at ANZ, suggests that at $127 million, the NZ’s headline (unadjusted) monthly trade surplus was close to expectations in June (mkt: $150m).

Key Quotes

“Both export and import values were also close to expectations. In seasonally adjusted terms, a $78m deficit was recorded, which continues to narrow after a $474m deficit recorded in March. Over the June quarter, the seasonally adjusted deficit was a modest $173m, which is actually the smallest quarterly deficit since Q2 2014.

Seasonally adjusted export values were a touch lower in June (-0.8% m/m), which maintains some stability after the extreme volatility seen earlier in the year. Across the categories, dairy export values lifted 10% m/m (courtesy of a 14% m/m increase in volumes), while fruit exports were also strong in the month (+7.6% m/m). Statistics NZ report that kiwifruit exports have been a top performer over recent months. This was offset by weaker values for meat, seafood, forestry, and electrical machinery exports.

Seasonally adjusted import values were also slightly lower (-1.0% m/m). Our own seasonally adjusted estimates of the categories suggest that stronger consumption goods and crude oil imports were offset by a modest falls in capital goods imports.

The underlying picture with New Zealand’s trade accounts has actually looked pretty good of late. Despite clear dairy sector strains, a strong performance by other primary export sectors has helped fill the void. The smaller seasonally adjusted trade deficit for the quarter also sets the scene for another improvement in the seasonally adjusted current account deficit for the quarter.

But looking forward, we continue to forecast a modest deterioration in the trade balance over the coming year or so. While the recent stabilisation in New Zealand’s broader export commodity prices is encouraging, the terms of trade is still assumed to fall modestly as the impact of previous export commodity price weakness continues to flow through and as the impact of slightly higher oil prices boosts import values.”