KEY POINTS:
Growing dairy exports led New Zealand's merchandise terms of trade up 2 per cent in the March quarter.
The rise was less than expected, with the median prediction from economists polled by Reuters having been for a rise of 2.5 per cent.
Data released today by Statistics New Zealand (SNZ) showed a 3.2 per cent fall in meat prices, offsetting a 2.8 per cent rise in dairy prices.
Overall export prices were down 0.2 per cent, compared to the median economist forecast of a 1.5 per cent rise.
The merchandise import price index fell 2.1 per cent in the March quarter, with the main contributions coming from a 3.7 per cent fall in mechanical machinery prices and a 3.6 per cent fall in petroleum and petroleum products.
The median prediction was for a 1.1 per cent fall.
Seasonally adjusted export volumes rose 2.4 per cent in the March quarter from the three months to December. The dairy product index lifted 10.2 per cent, adding to high volumes of dairy exports recorded since the June 2006 quarter, SNZ said.
The seasonally adjusted import volumes index rose 2.2 per cent.
SNZ said the 10.2 per cent rise in the dairy products volumes index took it to its highest level since the series began.
The 2 per cent rise in the merchandise terms of trade, meant that in the March 2007 quarter 2 per cent more merchandise imports could be funded by a fixed quantity of merchandise exports than in the December 2006 quarter.
The milk and cream (liquid or powder) sub-index, which rose 14.8 per cent, was also at a record high and was the main contributor to the rise in the dairy index.
The non-food manufactures exports volume index rose 5.5 per cent in the quarter, taking it to its highest level since the December 2004 quarter.
The main commodities contributing to the rise were pleasure boats and caseins, SNZ said.
Lower export volumes of frozen boneless cuts of beef and of mechanical wood pulp had contributed most, respectively, to a 5.3 per cent fall in the meat index and an 8 per cent fall in the non-fuel crude materials index.
Among the merchandise import volume indexes, the total intermediate goods index was up 2.6 per cent, to just below its all time high recorded in the June 2005 quarter.
Main contributors to the increase were a 12 per cent rise in parts and accessories of capital goods and transport equipment, and a 6.5 per cent lift in processed fuels and lubricants.
DVD players and recorders were the main contributors to an 8.1 per cent rise in the durable goods import volumes sub-index.
Increased volumes of medicinal products, including anti-viral drugs, contributed to a 5.9 per cent rise in non-durable goods import volumes, SNZ said.
The motor spirit volume index, often influenced by large, irregular imports, was up 58.8 per cent.
Westpac economist Dominick Stephens said the effect of the New Zealand currency had been a little stronger than expected, with both import and export prices down.
The export price fall was a bit of a surprise, and suggested dairy export company Fonterra was unable to convert spot prices into actual contract prices to the extent that had been anticipated.
ANZ National Bank senior economist Khoon Goh said timing issues could have had an impact on the figures.
Given commodity prices continued to gain in April and May, further gains to the terms of trade could be expected in the second quarter.
- NZPA
