Trade deficit narrows in September on higher dairy exports

The New Zealand dollar was steady after the data.

New Zealand's trade deficit narrowed in September as the value of dairy exports rose, but was still wider than economists expected on both the monthly and annual basis.

The country's trade deficit was $1.1 billion in September versus $1.4 billion in the same month a year earlier, Statistics New Zealand said. That was wider than the $975 million median forecast in a Bloomberg survey of 10 economists. The annual deficit was $2.91 billion versus $3.35 billion a year earlier. Economists surveyed by Bloomberg had expected an annual deficit of $2.71 billion.

The New Zealand dollar was steady after the data, trading at 68.85 US cents versus 68.68 US cents as at 8am. Stuart Ive, OMF private client adviser, said the numbers were not "far off the mark" and need to be massively different to impact the currency. "There were no surprises," he said.

Exports rose 9 percent to $3.78 billion in September compared with the same month a year earlier, versus expectations of $3.9 billion. Milk powder, butter and cheese posted the largest increase of any export commodity group in September, rising 28 percent to $791 million. The value of exported milk fats - including butter - rose 43 percent to $207 million while the quantity sold dropped 22 percent. Milk powder export values rose 20 percent even as the volume shrank 15 percent.

"The increases in both butter and milk powder were price-driven," international statistics manager Tehseen Islam said. "Milk and cream were mainly volume-driven, especially to China, though prices were up, too."

Exports to China rose 33 percent to $875 million in September from the same month a year earlier, led by dairy, while exports to Australia rose 7.9 percent to $740 million.

Fruit exports fell 30 percent in value to $160 million while volumes dropped 38 percent. The fall in fruit exports was due to kiwifruit, which fell $70 million in value and 42 percent in quantity.

Imports lifted 1.4 percent to $4.92 billion, in line with expectations. Mechanical machinery and equipment led the rise imports, up $116 million or 19 percent. Food residues, wastes and fodder rose $47 million or 118 percent.