Higher oil prices push trade deficit to record $1.5b

Near-record levels of merchandise goods imported in August contributed to the largest-ever monthly trade deficit, Statistics NZ says.

Most of the increase came from higher-priced petroleum and oil-based products.

The deficit of $1.5 billion is equivalent to 37% of exports and compares with the average of a $1.0b deficit for that month over the past five years.

Statistics NZ international statistics manager Tehseen Islam says this high level of imports comes at a time when exports are typically low.

“The high values for total monthly imports in the past four months helped push the annual trade deficit to a nine-year high of $4.8b,” he says.

Imports rose $675 million, or 14% up on the corresponding month last year, to reach $5.5b, the third-highest total on record. Exports were up $366m to $4.1b.

Petroleum and products rose 50% on a year earlier to $186 m, with crude oil up $98m and diesel up $73m.

Oil at four-year high
International oil prices are at their highest level in nearly four years, with the global benchmark, Brent, now over $US80 a barrel.

Mr Islam says imports of crude oil and other petroleum products tend to fluctuate from month to month.

“The quantity of crude oil imported in August fell 13% from August 2017 but prices rose by about 60%,” he says.

The latest unit price for crude oil remains 31% lower than the most-recent series peak in May 2012.

Imports of vehicles, parts and accessories rose $55m in August, with buses, cars, and trucks all making similar contributions.

Meat leads exports rise
The value of total exports was $4.1 billion in August 2018, up $366 million (9.9%) from August 2017.

The leading contributor to the $366m, or 9.9%, rise in total exports to $4.1b was meat products and edible offal, up $137m, or 43%. This increase was led by sheepmeat (up $83m or 55%) and beef (up $45m or 31%).

“New Zealand is exporting more beef and lamb, and getting better prices, too,” Mr Islam says.

Dairy products rose $80m, or 17%, led by an increase in butter and other milk fats, up $63m, while forestry products rose $74m (18%), led by a rise in untreated logs, up $58m.

Westpac senior economist Satish Ranchhod says seasonally adjusted exports fell 4.7%.

"A pullback had been expected following the large gain in July.," he says. "The fall was widespread and included a reduction in dairy exports after a larger-than-usual number of shipments in July."

After adjusting for normal seasonal patterns, imports actually fell 3.4% in August.