Trade deficit rises on plane imports; meat drives export growth
New Zealand's trade deficit was bigger than expected in August as one-off imports of aircraft widened the shortfall, even as international meat sales drove export growth to a record for the month.
The trade deficit widened to $1.04 billion in August from a shortfall of $465 million a year earlier, as aircraft purchases totalling $230 million lifted the value of imports 19 percent to $4.77 billion, according to Statistics New Zealand. That outpaced the 4.4 percent growth in exports to $3.73 billion, the highest ever value for a month of August. A Reuters poll of economists predicted a monthly deficit of $850 million, on exports of $3.67 billion. The annual trade deficit was $3.33 billion, including $1.11 billion of large import items through the year.
"While the deficit was a bit wider than markets were expecting, most of the variation relates to imports of capital equipment which can be volatile on a month-to-month basis (in this case, importation of an aircraft threw the monthly figures around)," Westpac Banking Corp senior economist Satish Ranchhod said in a note. "Consequently, today's result does not imply any significant risk for the trade balance going forward."
Meat and edible offal led the gain in international sales, rising 34 percent to $430 million, and up an annual 16 percent to $6.58 billion. Beef was the biggest contributor, with a shortage in the US set to see New Zealand fill its quota to the world's biggest economy for the first time in 11 years.
"With one month to go in the 2014/15 beef export season, beef exports are at a new high of $3 billion," said Jason Attewell, international statistics senior manager. "So far this season, 404,000 tonnes of beef have been exported, and if we export at least 18,000 tonnes next month we'll surpass the peak 2003/04 season for quantity exported."
Beef exports have been one of the highlights for the country as a slump in global milk prices has eroded the value of foreign dairy sales. Exports of milk powder, butter and cheese fell 7.5 percent to $610 million in August, and were down 25 percent to $11.99 billion, while casein and caseinate sales slipped 2.1 percent to $65 million for a 6.5 percent annual gain to $1.15 billion. Dairy products account for about 27 percent of the country's $49.08 billion in annual exports.
Fruit exports also helped drive up foreign sales, rising 63 percent in August to $272 million, for a 26 percent annual increase to $2.21 billion. Logs, wood and wood articles, the country's third biggest export commodity, rose 6.7 percent in August to $298 million, and were down 8.8 percent in the year ended Aug. 31.
Exports to the US, New Zealand's third biggest destination, rose 15 percent to $383 million and were up 30 percent to $5.65 billion in the year. Exports to China edged up 0.5 percent to $620 million, and were down 28 percent in the year to $8.36 billion.
Imports of vehicles, parts and accessories rose 12 percent to $677 million in August, for a 6.6 percent annual gain, and were the biggest imported commodity. Petroleum and products imports fell 11 percent to $415 million and were down 21 percent to $6.25 billion in the year as global oil prices fell through the period.