WELLINGTON: New Zealand ran a worse than expected trade deficit of $649 million in July, almost twice as big as usual, though exports of fruit and beef were well up on a year ago. Exports worth $4.2 billion in July were outweighed by imports of $4.8 billion, but there were signs of some improvement in exports to the key market of China, after the big slump in the past couple of years.
Seasonally adjusted, the value of total exports jumped 8 per cent between June and July this year, a lift of $317m, more than reversing a near 6 per cent loss between May and June. Seasonally adjusted exports to China rose between June and July, up almost 10 per cent to $854m. However the trend for goods exports to China is 26 per cent down on the peak seen at the end of 2013.
Between June and July there was a seasonally adjusted 19 per cent gain in milk powder, butter and cheese exports, a gain of $174. But that was roughly accounted for by a 20 per cent lift in volumes between June and July.
Exports of dairy products have been hammered in the past year as world prices have plunged about 50 per cent in six months in the face of falling demand, especially from China. However, in the latest Global Dairy Trade auction last week, prices rebounded almost 15 per cent, after ten falls in a row.
Annual exports to China have collapsed by more than 27 per cent to $8.3 billion, though it remains New Zealand’s second largest export market after Australia.
The Chinese economy has been slowing down rapidly and the their central bank has cut interest rates five times in the past nine months to help boost the economy. The latest rate cut this week followed the market panic which has seen the Shanghai market plunge about 16 per cent over just two days on Monday and Tuesday. That followed weak Chinese manufacturing figures out last week and a set of moves to devalue the yuan currency earlier in the month.
Meanwhile New Zealand’s exports to the United States have rocketed up more than 30 per cent in the past year to almost $5.6b, helping offset the crunch in trade with China. For the July, total exports are down just 4.2 per cent by value to $48 billion.
The $649m monthly trade shortfall was slightly worse than market expectations of about $600m. For the July year, the trade shortfall was $2.7 billion Statistics NZ figures showed.
The July deficit was equal to 15 per cent of exports compared with an average of 9.2 per cent in the past five years. Exports in July were worth $4.2 billion, up 14 per cent on the same month last year. That was led by a 51 per cent rise in fruit exports, up $105m on the same month last year to $311m.
Meat exports rose $99 million (24 per cent) to $505 million in July 2015 when compared with the same month last year. The rise was led by beef, up $70 million (40 percent).
Milk powder, butter, and cheese exports showed little change, up $0.9 million (0.1 percent) to $932 million. Increases in cheese, dairy spreads, and milk protein concentrates offset the fall in milk powder exports (down $76 million).
“The small rise in dairy export values combined with the falling New Zealand dollar contributed to the rise in total exports value this month,” Statistics NZ international statistics senior manager Jason Attewell said. “A weaker dollar means that exporters receive more New Zealand dollars for transactions in foreign currencies while imports cost more.”
Goods imports rose $221 million (4.8 percent) to $4.8 billion in July 2015 compared with July 2014. Consumption goods rose $176 million and capital goods rose $161 million. Intermediate goods fell $96 million, led by crude oil.
