Hopeful sign in rise of capital goods imports

Rising capital goods imports are lifting hopes for a pick up in economic activity.

Figures published by Statistics New Zealand (SNZ) today put the value of plant and machinery imports last month at $609 million, the highest level since December 2008.

Transport equipment imports at $85m were the second highest in 11 months.

The figures were in data which showed New Zealand recorded its third consecutive quarterly, seasonally adjusted trade surplus, with a surplus for the September quarter of $378 million, equivalent to 3.5 percent of exports.

For just the month of September, the country recorded an actual trade deficit of $532m, or 17 percent of exports, compared with an average deficit of 28 percent over the preceding five September months, which are typically deficits.

The annual trade balance for the September year was a surplus of $921m, or 2.2 percent of exports, compared with an average deficit of 14 percent over the preceding five September years, SNZ said.

Exports in September were valued at $3.2 billion, up $335m or 12 percent from a year earlier. Imports for September were up $306m or 9.1 percent to $3.7b.

For the year, exports rose $208m or 0.5 percent to $41.8b, while imports were down $2.4b or 5.5 percent to $40.9b.

The seasonally adjusted quarterly figures showed exports down 2.5 percent from the June quarter to $10.8b, while imports fell 3.1 percent to $10.4b.

Goldman Sachs economist Philip Borkin said the imports of machinery and plant were up 32 percent year-on-year.

"This could be an early sign of businesses wanting to put some more cash to work and we greet this as positive," he said.

ANZ noted capital goods imports had been above $600m for the second month in a row, and were starting to approach the levels that had been common in the months before the recession, above $700m.

It was a positive step towards alleviating concerns in the Reserve Bank's September monetary policy statement that only limited capacity enhancing investment was taking place, ANZ said.

ASB economist Jane Turner said the rise in capital imports pointed to a recovery in business investment in the third quarter.

While some areas of exports eased in the third quarter, that followed a strong first half performance, while areas such as dairy continued to benefit from strong commodity prices, she said.

The quarterly fall in exports was the first decline since the December quarter and followed rises of 11 percent and 6.1 percent in the March and June 2010 quarters, respectively.

Meat and edible offal product exports fell 23 percent or $310m for the quarter, with quantities down 19 percent.

Crude oil exports, which are not seasonally adjusted, fell 13 percent or $73m over the quarter, while exports of logs, wood and wood articles fell 9.2 percent or $70m in the first quarterly fall since March 2009 as quantities fell 3 percent.

Milk powder, butter, and cheese exports were up 4.8 percent or $130m in the quarter, passing the previous high recorded in the June 2010 quarter.