New Zealand records positive trade balance in December, annual deficit likely to narrow

New Zealand recorded a positive trade balance for the month of December as exports returns lift on the back of the seasonal rise in primary produce. This is the first time since May that export returns surpassed import values. Imports generally fell in December as is typically the case, noted ANZ in a research report.

The unadjusted monthly trade balance came in at a surplus of NZD 264 million in December after six months of trade deficits. Exports came in at NZD 5.48 million, owing to solid agriculture output while imports came in a bit lower than expectations.

Meanwhile, on a seasonally adjusted basis, exports rose 6.2 percent sequentially. As was anticipated, a rise in dairy exports countered a fall in meat. Meat volumes dropped 7.9 percent sequentially as farmers are holding on to stock because of having more feed on hand than normal. The good growing season prompted a rise of 7.4 percent in dairy volumes. A reduction of 13.4 percent in forestry volumes was quite surprising; however, it might be due to timing given felling rates have been solid, said ANZ.

Imports were up 0.4 percent sequentially on a seasonally adjusted basis. Petrol imports rebounded 19 percent, following two straight monthly falls, while other key import categories weakened. Electrical machinery and equipment dropped 14.2 percent sequentially and textiles fell 20.3 percent. In all, imports came on the softer side of expectation for the month, and implies domestic demand is moving sideways at best.

Region wise, exports to China continue to rise, growing 15.2 percent in 2018, showing the ever rising significance of this market. Imports from China also lifted by 14.8 percent.

The seasonally adjusted goods deficit rise NZD 309 million to NZD 1487 million, given a fall of 0.5 percent in exports and 1.4 percent rise in imports on a quarterly basis.

“The annual deficit is expected to narrow as the year progresses reflecting stronger export volumes for dairy, meat and forestry, and the improvement in prices for dairy”, added ANZ.

At 11:00 GMT the FxWirePro's Hourly Strength Index of New Zealand was bullish at 76.448, while the FxWirePro's Hourly Strength Index of US Dollar was bearish at -90.5386 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex