NZ: The twists in the merchandise trade tale – BNZ

Craig Ebert, Senior Economist at BNZ, suggests that the NZ’s August merchandise trade deficit stood at $1,265m and turned out to be much larger than the $735m anticipated by the market.

Key Quotes

“A miss of a couple of hundred million is not that unusual, but one of more than $500m is worthy of some explanation. In effect, it was shot from both sides. Exports of $3,387m fell short of market expectations ($3,600m) while imports of $4,652m overshot the market’s $4,300m by some margin.

In many ways, the merchandise exports result better reflected the slowdown in rural production playing out. In particular, a correction in meat processing, after a bulge in Q2, is coming home to roost in the monthly trade figures. Meat export tonnage in August was 17% down on the same month last year.

August’s export data thus reinforce the likelihood that Q3 export volumes, overall, will fall. However, this is after rebounding a mammoth 7.6% in the Q2 GDP accounts, following their 2.6% drop in Q1. It’s not the start of a negative trend for total goods exports, in other words, more of a correction in rural production. And even with this, merchandise export volumes in Q3 are likely to be comfortably up on year-ago levels.”