The economy may technically be out of recession, but new figures show businesses are still not confident enough to use the high exchange rate to import plant and machinery at cheaper prices.

The country’s trade balance improved in November, Statistics New Zealand announced this morning, with a drop in deficit from -$487 million to $269 million.

The value of exports continued to fall – the November figure was $3.1 billion, down $614 million on the same time last year.

Imports fell further, with the figure of $3.3 billion, down $938 million on the same time last year.

The export trend has been steadily ailing since October 2008 and is down 15.5% since then.

This is the sixth consecutive fall and the fall in values was across almost all categories, with crude oil being the sole exception.

Imports have declined 25.7% in value since August 2008 – the longest period of decline since Statistics New Zealand began the series in 1988, although the decline has eased in recent months.

The more telling part of the import side of the ledger is just where the decline is taking place.

Imports of intermediate goods – basically, goods which are used to make other goods – showed the largest increase, down $741 million, or 33.9%.

Capital goods also showed a dramatic fall, down $226 million (29.4%), mostly in mechanical machinery and equipment.

The significance of these falls is they came at a time the high New Zealand currency made imports of such goods cheaper.

They also came at a time both the country’s business mood surveys show firms becoming more confident about their future, and telling the surveys they were planning more investment.

The figures suggest a couple of things – and they are not mutually exclusive.
One is that firms are less upbeat, when it comes to actually committing money to further investment, than they are when answering those surveys.

The other is that banks have become much more conservative with their lending and have been less willing to grant credit for expansion than businesses hoped.

A further possibility, of course, is there is a time lag, and that the New Year will see that planned increase in capital investment.

We will have to wait some time before that starts showing up in the figures – if indeed it does.