Trade deficit widens to $285m in January, dominated by crude oil

New Zealand widened to a $285 million trade deficit in January with imports rising to a record for the month, led by crude oil.

The monthly trade deficit was worth 7.3% of exports, though that drops to 0.9%, or $36 million when crude oil exports and imports are excluded, Statistics NZ said. The country had a $41 million trade deficit in December 2016.

Exports rose 0.3% to $3.9 billion from the year-earlier month, led by milk powder, butter and cheese which gained 4.5%, while log and wood exports dropped 4%. Milk powder exports, which increased $48 million in the month, were led by a $37 million gain in exports to China – a 19% value gain despite falling 1.7% by quantity. Butter exports rose 5.5% by value but dropped 20% by quantity. Meat, New Zealand's second-largest export commodity group, rose 2.7% in the month, led by lamb.

China remained the country's top export destination in January, up 12% overall, while exports to Australia rose 13%. Exports to the EU, the fourth-largest market, dropped 26% with falls from meat, down 32%, and ships and boats.

Imports increased 8% to $4.2 billion, the highest value for a January month, with all three broad categories – capital goods, intermediate goods and consumption goods – rising. Crude oil imports rose 88% in the month, pushing the intermediate goods category to a 7.2% gain. Excluding crude oil, intermediate goods imports fell 1.5%.

Capital goods imports gained 9.3%, led by machinery and plants and transport equipment. Consumption goods rose 6%.

China also remained the top source for New Zealand's imports, though goods from the country dropped 0.5% to $874 million in the month, with gains from machinery offset by falls in fertiliser and clothing.

Imports from the EU, the second-largest market, rose 0.6% to $715 million, led by a 30% gain on cars, more than half of which were from Germany. US imports gained 14% to $414 million, with a rise from machinery and organic chemicals.

On an annual basis, New Zealand had a merchandise trade deficit of $3.5 billion in the 12 months to the end of January.

(BusinessDesk)