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Sharon Zollner, Chief Economist at ANZ, notes that the NZ’s monthly goods deficit was the third largest on record when excluding large items (aircraft), surpassed only by the previous two months and the annual deficit is now the highest in 11 years.

Key Quotes

“The unadjusted monthly trade deficit pared back $300m in October to $1,295m. Both exports and imports were slightly higher than expected; petroleum products accounted for a third of the rise in imports.”

“On a seasonally adjusted basis, exports fell 6.4% m/m, but are hovering around historically high levels. Surprisingly, fruit exports were down 0.9% m/m, despite the $165m in total kiwifruit exports being the highest on record for an October month. Dairy, meat and forestry products all rose on strong volumes (6%, 13% and 12% respectively).”

“Seasonally adjusted imports fell 4.6% m/m, partially unwinding last month’s revised 9.6% lift. Petroleum products fell 15% m/m in what typically is volatile data, but major imports such as mechanical and electrical machinery and equipment (cell phones) rose 20% and 6% apiece. Textiles also rose a solid 18% m/m. Overall, imports items came in on the high side and paint a picture of solid domestic demand.”

“Despite world prices for some of our key exports falling in recent months, the annual deficit is expected to narrow over the year ahead, reflecting solid dairy volumes and still-strong demand for other major exports. A wary eye would look to global market growth wobbles, tense US trade relationships, and the resilient New Zealand dollar for risks to export performance.”