Surprise trade surplus in January on weak imports (Update 1)

The merchandise trade balance for January 2010 was a surplus of $269 million, Statistics New Zealand said today. (Update 1 includes ASB economist comment). "As a percentage of exports this is the biggest trade surplus for a January month since 1989," a spokesperson said. "Until this year, deficits had been recorded for the previous eight January months." Exports for January were $3.2 billion, down $19 million compared with January 2009, while imports were $2.9 billion, down $390 million. The main commodities contributing to the fall in imports were automotive diesel (down $105 million); mechanical machinery and equipment (down $102 million); and electrical machinery and equipment (down $79 million). Crude oil (up $106 million) was the main commodity to show an increase. Results for exports were mixed, with 24 of the top 40 export commodities recording decreases for the January 2010 month. Casein  (down $88 million); cereals, flour, and starch (down $52 million); and meat and edible offal (down $44 million) recorded the largest falls. These falls were offset by increases in exports of crude oil (up $148 million); and milk powder, butter, and cheese (up $103 million). Here is ASB economist Jane Turner's take on the figures:

The trade balance posted a surprisingly robust surplus of $270m in January, much stronger than the $100m deficit market expectation. Relative to expectations exports were significantly stronger, while imports were slightly weaker. The almost $400m surprise saw the annual balance improve to a deficit of just $178m. This represents a dramatic turnaround in NZ's trade position over the past year, underscored by solid agricultural export performance and weak import demand. Over 2010, we expect these trends to begin to reverse. Nonetheless, this improvement creates a solid starting point, which should flow through to a smaller current account deficit in 2010.