Terms of trade rise 4.4% in March quarter on cheap imported petrol
Oil prices have slumped as global producers maintain production to keep market share.
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New Zealand's terms of trade unexpectedly rose in the first three months of the year as cheap petrol pushed down import prices while export prices were little changed.
The merchandise goods terms of trade, which measures the buying power of New Zealand's exports abroad, rose 4.4% in the March quarter as export prices were unchanged and import prices fell 4.3%, Statistics New Zealand said. The increase snapped two-quarters of declines and was better than the 0.2% fall predicted in a Reuters survey. Import prices were led by a 24% slump in petrol and petroleum products, following on from a 25% drop in the December quarter.
"The drop in import prices this quarter was largely due to falling world prices for crude oil," business prices manager Sarah Williams said. "Import prices are now at their lowest level in nearly 30 years."
Oil prices have slumped as global producers maintain production to keep market share and fend off US shale-based gas producers. Cheaper energy costs have slowed the pace of inflation around the world and created problems for central banks, which typically target a modest but higher increase in consumer prices. The kiwi gained to 67.91USc from 67.67USc immediately before the release.
The services terms of trade rose 3.6% in the March quarter as prices for travel and other services helped lift export prices 1.5% while lower imported transportation and travel prices led to a 2% fall in import prices.
Seasonally adjusted merchandise export volumes fell 2.7% and import volumes decreased 0.7% while the seasonally adjusted value of exports slipped 2.87% and imports dropped 3.3%.
Volumes of exported dairy products dropped 8.4%, while values were down 6.4% while meat export volumes shrank 14% for a 16% drop in value. Wool export volumes rose 27% and values were up 21% while forestry product volumes increased 1.9% and values were up 3.1%.
For imports, the volume of petrol products climbed 23% while the value imported dropped 6.8%.
(BusinessDesk)
Paul McBeth
Wed, 01 Jun 2016
Wed, 01 Jun 2016
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Terms of trade rise 4.4% in March quarter on cheap imported petrol
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