NZ trade balance remains in deficit in November; Export trend still negative (Update 1)

The value of New Zealand's exports and imports in November continued to fall from the year before as the trade balance remained in deficit, figures released by Statistics New Zealand show. However, the deficit in November represented only 8.8% of exports compared to an average November deficit of 27.6% of exports for the previous five years. (Update 1 includes economist comment.) Export values in November were down 16.7% from the year before, while import values were down 22%. November was the eighth consecutive month in which the value of imports had fallen and the sixth consecutive month in which exports had fallen compared with the same month of the previous year, Stats NZ said. The value of New Zealand's largest export category, milk powder, butter, and cheese, fell 24.9% from November 2008. The fall was led by unsweetened whole milk powder, despite export quantities rising 48%, Stats NZ said. New Zealand's trade balance was a deficit of NZ$269 in November, less than half of what it was in November 2008 and up from a deficit of NZ$495 million in October. The trade balance was positive between February and May 2009, before crashing to a deficit of NZ$717 million in August. However, since then, export values rose almost 12%, while import values remained relatively stationary. Despite this, the trend series for exports (which takes out seasonal fluctuations) remained negative in November, although it did ease from October. The falling trend in imports eased to stationary in November from October. ASB economist Jane Turner said import demand was likely to pick up as the economy begins to recover, limiting further improvements in the trade deficit.

The narrowing traded goods deficit has contributed to the smaller current account position over the past year. However, the improvement has largely come from lower imports as a result of falling domestic demand during the recession. As the NZ economy begins to recover over 2010, import demand is likely to pick up and limit further improvements in the trade deficit.

Here is the release from Stats NZ:

The value of both merchandise imports and exports fell in November 2009 compared with November 2008, down 22.0 percent and 16.7 percent, respectively, Statistics New Zealand said today. This is the eighth consecutive monthly fall for imports and the sixth consecutive month that exports have fallen compared with the same month of the previous year. The import and export trends (which remove seasonal and irregular fluctuations) have continued to decline since peaking in the latter half of 2008. The imports trend has fallen 25.7 percent since peaking in August 2008, although the rate of decline in the trend has been easing in recent months. The trend in export values has fallen 15.5 percent since peaking in October 2008. Most commodity categories contributed to the $938 million fall in imports in November 2009. The largest contribution came from mechanical machinery and equipment (down $137 million or 25.9 percent). Petroleum and products was the next largest decrease and was led by falls in crude oil and automotive diesel, both mainly due to lower prices. Similarly, most commodity categories contributed to the $614 million fall in exports in November 2009. Milk powder, butter, and cheese, the largest export category (down $250 million or 24.9 percent), was the largest decrease. This fall was led by unsweetened whole milk powder, despite quantities being 48.0 percent higher than in November 2008. The November 2009 trade balance was a deficit of $269 million or 8.8 percent of exports. This compares with an average November deficit of 27.6 percent of exports for the previous five years.