New Zealand’s monthly goods trade deficit narrows in July, solid milk production to underpin trade

The monthly goods trade deficit of New Zealand narrowed in the month of July, while base effects saw the annual deficit widen to NZD 4.4 billion. On a seasonally adjusted basis, a solid month for exports, along with subdued import values shows a pretty positive picture heading into the second quarter.

The unadjusted trade balance narrowed more than expectations to NZD 143 million. The big picture continues to be strong with widespread strength throughout most export sectors, led by solid demand from Greater China and the remainder of Asia.

Export values, on a seasonally adjusted basis, rose 6.3 percent sequentially, mainly driven by an impressive 20.1 percent sequential rise in dairy. Meat exports also came in strong, with a 14 percent sequential rise in values driven largely by stronger volumes Forestry volumes rose 22.1 percent sequentially.

Meanwhile, imports contracted 0.4 percent sequentially, largely maintaining June’s solid 9.6 percent rise. On a year-on-year basis, imports rose 21.3 percent, still reflective of a strong domestic demand backdrop. In the year ended July, petrol imports rose 28.4 percent while solid growth in passenger motor car imports has turned.

“The shine has come off the world price for a number of New Zealand exports in recent months, but a weaker NZD is expected to contain further widening in the trade deficit from here, with strong milk production providing further support”, noted ANZ in a research report.

At 13:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was neutral at 24.554, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -21.3716. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex