Today's merchandise trade statistics hold some good news for the fragile economic recovery.And the best news is not in the headline figure – good though that was.The latest trade balance, for the 12 months to October, is a surplus of $1.179 billion.
Today’s merchandise trade statistics hold some good news for the fragile economic recovery.
And the best news is not in the headline figure – good though that was.
The latest trade balance, for the 12 months to October, is a surplus of $1.179 billion.
It is the first time for 16 years there has been an annual trade surplus over more than $1 billion.
Over the month of October, exports rose 24% in October while imports rose 16%.
The main driver of exports was a 16% rise in the dairy group.
The best news for the economic recovery though is on the import side of the ledger.
The main increases here were in intermediate goods and capital goods – especially plant and machinery.
The intermediate goods is less significant, as it is dominated by the volatile factor of crude oil – and imports of these rose 47% ($130 million) over the month. Processed industrial supplies however also increased by $85 million (12%).
Imports of capital goods were up $101 million, or 16%, with imports of plant and machinery up $53 million or 11%.
Some of this will be driven by firms taking advantage of the high New Zealand dollar cross rate against the US currency and using it to buy imported plant and machinery items more cheaply.
But the more significant factor is that it is happening at all. The rise indicates some growing confidence in the prospects for the economy over the next few years.
Business confidence surveys have recently indicated a small return to optimism – and the next of these, from the National Bank, will be out later this afternoon.
Those surveys can fluctuate will all the volatility of crude oil imports. But the trade figures show firms are actually putting their money where their – tentative – optimism is.
