The country's terms of trade continue to improve, with a 2.1% increase for the June quarter.Prices for exports rose 3.8%, while prices for imports rose 1.7%. Higher payments for dairy (up 6%) and meat (4.5%) drove the rise in export prices, while higher
The country’s terms of trade continue to improve, with a 2.1% increase for the June quarter.
Prices for exports rose 3.8%, while prices for imports rose 1.7%. Higher payments for dairy (up 6%) and meat (4.5%) drove the rise in export prices, while higher prices for petrol and petroleum products (4.7%) and food and beverages (4.3%) were the main contributors to the rise in import prices.
The overall increase though was on the low side of forecasts: the consensus outlook was for an increase of 4.5%, with several bank economists picking an increase of around 7%. That said, the continued increase , which follows rises of 5.8% and 6.1% in the previous two quarters, brings the terms of trade within 3% of their last peak, in March 2008, which was the highest since the terms of trade crashed in 1974.
There are some significant straws in the wind within the data, released this morning by Statistics New Zealand – and it is not all positive.
Some good news: export prices for forestry products are at their highest level since March 2001, due to higher world demand for wood pulp and logs, and the volume of forestry exports is at its highest level ever.
Capital goods imports are up and, by volume, showed the largest increase for the quarter. However, this is skewed by the importation of a couple of aircraft. The area of greatest impact on productivity, volumes of plant and machinery imports, fell 6.4% – and this was at a time a high exchange rate should have been helping boost such imports.
A further not-so-happy pointer is services area: here, the terms of trade fell 0.7%, with air transport and travel prices being the two main drivers.
