Balance stays in the red

Hopes that New Zealand's trade balance would return to the black for the first time since 1995 were dashed by disappointing June figures.

Provisional data based mainly on import figures released by Statistics New Zealand showed a June month surplus of $110 million, leaving the June year balance in deficit to the tune of $52 million.

Economists had forecast a surplus of $200 million for the month that would have nudged the annual balance into surplus for the first time in six years when surpluses in the billions were regularly recorded.

June exports of $2.78 billion fell 14 per cent from May's all-time record of $3.23 billion - the largest fall for 18 months. June exports were up 14.2 per cent on June last year.

Against that, imports in June rose 4.1 per cent to $2.67 billion. Exports for the year to June were at $31.89 billion and imports $31.94 billion.

Economists and the Reserve Bank have been perplexed about why New Zealand exports, particularly manufactured products, have not responded more vigorously to the low New Zealand dollar.

News that companies such as PanPac and the Tiwai Point aluminium smelter, Comalco, have been cutting production due to very high spot market electricity prices may provide a clue. However, weak export figures may also be because the global slowdown is starting to bite.

All major import categories showed increases in value during the June quarter except crude oil.

- NZPA