January trade deficit pushed by dairy decline

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New Zealand recorded a trade deficit in January, reflecting a larger-than-expected decline in exports led by dairy products, while imports rose.

The deficit was $305 million last month, for an annual trade gap of $1.3 billion, according to Statistics New Zealand. That compares to the forecast in a Reuters survey of a $100 million surplus.

Exports fell to $3.35 billion from $4.07 billion a month earlier and compared to $3.65 billion in the Reuters survey. Imports rose to $3.65 billion from $3.58 billion. The seasonally adjusted deficit in January was $287 million.

"The deterioration in the January trade balance was in part payback for its surprising bounce in the previous month," said Michael Gordon, economist at Westpac Bank. "We still expect a modest pickup in export earnings over this year, as the impact of higher world dairy prices has yet to flow through."

Australia remained the biggest destination for New Zealand goods, though the value of shipments fell about 13 per cent to $635 million in January from the same month last year, while in the 12 months they fell 9.8 per cent to $9.8 billion.

China remained in second place, with exports rising 3.1 per cent to $647 million in the month and jumping 14 per cent to $6.88 billion in the year.

Exports to the US fell 1 per cent to $310 million in January and rose 4.7 per cent to $4.2 billion in the 12 month period. Shipments to Japan tumbled 19 per cent to $178 million in the month and fell 8.6 per cent to $3.2 billion in the year.

Exports of milk powder, butter and cheese fell 16 per cent to $1.1 billion in January from the same month of 2012 and fell 7.7 per cent to $11.2 billion in the 12 months ended January 31. Meat exports rose 9.6 per cent to $447 million in the month for a 4.8 per cent annual decline top $5.2 billion.

Logs and wood exports rose 6.4 per cent to $187 million in the month for an annual decline of 0.8 per cent to $3.2 billion, while crude oil shipments tumbled 43 per cent in the month to $81 million and were down 19 per cent to $1.8 billion in the year.

China remained the biggest source of New Zealand imports, with monthly incoming shipments falling 1.3 per cent to $631 million for an annual gain of 2.3 per cent to $7.7 billion. Imports from Australia rose 6 per cent to $499 million in the months and fell 1.8 per cent to $7.2 billion in the year.

Imports from the US dropped about 29 per cent in the month to $368 million and fell 19 per cent to $4.2 billion in the year.

Crude oil and petroleum was the biggest import, falling 18 per cent to $616 million in January from a year earlier, to be unchanged in the 12 month period at $8.2 billion.