KEY POINTS:
The trade deficit hit $690 million last month as the country pulled in $1.20 worth of imports for every $1 of exports.
But October is always a deficit month and last month's gap was nearly $500 million narrower than the $1.17 billion in October last year.
On an annual basis the deficit was $5.8 billion, down from $6.3 billion in the year ended September and the smallest since last February.
Exports at $3.4 billion were $706 million or 26 per cent up on October last year, propelled by a $328 million or 60 per cent increase in dairy exports, reflecting high world prices, and a $250 million increase in oil exports from the offshore Tui field.
Goldman Sachs JBWere economist Shamubeel Eaqub said that while the dairy sector was enjoying very favourable conditions sheep and beef farmers were not.
Meat exports were down 14 per cent on October last year
Th number of animals slaughtered for export continued to run below levels a year earlier, Eaqub said.
The high New Zealand dollar was clearly a headwind for the sector, compounded by increased slaughter through late 2006 when very dry conditions prevailed.
Imports at $4.1 billion were $223 million or 5.7 per cent ahead of October last year.
Imports were boosted by a $150 million oil rig, but even putting that one-off aside imports were still at robust levels, especially as far ascapital plant was concerned, said Deutsche Bank chief economist Darren Gibbs.
In annual average terms capital goods imports have been running around 9 per cent ahead of a year earlier.
Imports of consumer goods were up 4.7 per cent on a year ago and cars up 4.7 per cent despite an exchange rate which has appreciated 7 per cent over the same period.
ANZ National Bank chief economist Cameron Bagrie expects export growth to remain robust over coming months as higher commodity prices on the spot market continue to feed through to the value of cargoes crossing the wharves, coupled with continuing production from Tui, whose reserves were just revised upward by 30 per cent.
IN THE RED
Exports
$3.4 billion, up 26 per cent on previous October.
Imports
$4.1 billion, up 5.7 per cent on previous October.
