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29/6/2015 — General
Low dairy exports hit May quarter figures
By Simon Hartley
A halving of dairy exports has contributed to the 4.7% or $214 million decline of total goods exported to $4.4 billion for May, compared to a year ago.
However, the trade balance between exports against imports in May - respectively $4.36 B and $4.01 B - left a $350 M trade surplus.
This, said Statistics New Zealand (SNZ), was ahead of most expectations and the fifth month in a row of surpluses.
SNZ international statistics manager Jason Attewell said at dairy's peak it made up two-fifths of total goods exports, but for May they accounted for one-fifth of total goods exported.
“Milk powder, butter, and cheese exports led the fall, down 28%, or $346 M,” Attewell said.
The decline in milk powder, butter, and cheese exports was led by whole milk powder, down 37%, with quantities down 6.9%, and while whole milk powder export values to China have been low compared with last year, values to other countries remained “fairly stable.”
Fruit exports rose $107 M to $445 M in May, the highest monthly value ever.
Goods imports fell $300 M, or 7%, to $4 B in May, intermediate goods fell $259 M, led by crude oil, capital goods fell $80 M, while consumption goods rose $4.8 M.
For the year ended May, the annual goods trade deficit was $2.6 B.
ASB rural economist Nathan Penny said the headline balance, of a $350 M surplus, was ahead of both ASB's and market forecasts.
“Most of the surprise was due to lower import values relative to expectations,” he said.
On a seasonally adjusted basis, dairy exports posted a small 0.3% monthly gain, reflecting the earlier and temporary strength of February prices. Nathan Penny noted the fortnightly global dairy auction prices did not come through in trade data until three months later.
Westpac senior economist Michael Gordon said the $350 M surplus was $100 M ahead of his expectations, and the market's expectations of a deficit.
“This was actually an improvement on the $246 M surplus recorded in May last year.
Consequently, the annual trade balance improved for the first time in nine months,'' Gordon said.
He said excluding fuel, imports were down 2.6%, with a particularly sharp drop in imports of capital equipment.
“This is not a positive sign for the economy's near-term growth prospects,” he said.
Gordon reiterated that weakness in business investment was a factor in the weak gross domestic product data, earlier this month, covering the March quarter.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.
Tradies might still be busy in Auckland and Christchurch, indirectly boosting an impression of busy-ness in other cities, but capital items are not being imported as heavily as they were. Our population is expanding but exports are dropping in value, and we have an annual trade deficit as per usual.