Dairy, wood push April trade surplus to NZ$656 mln (Update 1)

Dairy products, pine trees push April trade surplus to NZ$656 mln

Strong rises in exports of dairy products, logs and wood products pushed the country to a NZ$656 million April trade surplus and a NZ$161 million surplus in the year to April, the first annual trade surplus recorded since July 2002.

(Update adds comments from ASB economist Jane Turner).

Statistics New Zealand said today merchandise exports rose NZ$329 million in April, or 9%, compared to April 2009, to NZ$4 billion. Exports of milk powder, butter, and cheese led the increase in export commodities, rising by NZ$202 million or 29%. Logs, wood, and wood products delivered the second biggest rise, up NZ$68 million, or 34%, boosted by an increased volume of, and higher prices for, untreated pinus radiata logs.

ASB economist Jane Turner said the April trade balance was significantly stronger than the NZ$450 million surplus expected by economists, thanks to robust exports.

Exports to China and India rose the most, 44% or NZ$141 million, and 112% or by NZ$82 million, respectively. The NZ$656 million monthly surplus was equivalent to 16.5% of the value of exports.

Merchandise imports fell NZ$5 million, 0.2%, in April to NZ$3.3 billion with falls in petroleum, petroleum products and electrical machinery largely offset by the importation of the navy's offshore patrol ship HMNZS Otago, with military and other goods up NZ$95 million. Imports of vehicles, parts, and accessories also rose.

Imports from the United Arab Emirates, Russia and Australia rose the most, by NZ$92 million, NZ$88 million and NZ$44 million, respectively. Imports from Singapore and Brunei recorded the biggest falls, down NZ$64 million and NZ$58 million respectively.

The annual NZ$161 million surplus was equivalent to 0.4% of exports and compares to the average deficit of 10.8% of exports for the previous 10 April years.

"This is the first annual trade surplus recorded since July 2002, when an annual trade surplus was recorded across 14 consecutive months," Statistics New Zealand said.

Meanwhile, Turner said the trade balance continued to surprise on the upside.

"In contrast to 2009, where the improving trade balance was a result of weaker imports and the weaker economy, the current strength comes from improving export returns.  Commodity prices have recovered a long way over the past year, and will help to support the economic recovery through stronger export incomes," she said. 

"The recent volatility in markets underpinned by the uncertainty facing the Euro zone does threaten the sustainability of the recovery in export returns, particularly if fears of contagion cause major downward revisions to global growth expectations." 

However, NZ’s export exposure to the current crisis is limited to the extent that the recent recovery in exports has been driven by demand from the Asia Pacific region.  Nonetheless, the NZ economy in general does remain vulnerable to a deterioration in conditions in the Euro zone through other channels, such as the impact on global credit markets," Turner added.