KEY POINTS:
Record dairy exports and shipments from the new Tui oil field pushed the trade balance into the black by $33 million in December, a month when a trade deficit is normally recorded.
The market had expected a deficit of around $200 million. The average December deficit over the past 10 years is $312 million.
Dairy exports for the first time topped $1 billion for the month and were 77 per cent higher than in December 2006.
And with production from the Tui field, oil exports were $254 million, 10 times their level a year earlier and enough to offset one-third of the month's record oil imports.
The unexpected monthly surplus meant the trade balance for the whole of last year was a deficit of $5.3 billion, an improvement on 2006's $6 billion and 2005's $6.4 billion.
In the December quarter exports were up a seasonally adjusted 20.8 per cent on the September quarter while imports, even with two lumpy items - a large aircraft and an oil rig - were up 11.3 per cent.
Two-thirds of the quarter's $1.8 billion increase in exports was dairy products and oil.
But much of the quarter's 21 per cent increase in the volume of dairy exports merely reversed a timing-related drop of 14 per cent in the September quarter. By value dairy exports increased 47 per cent over the quarter.
Imports of plant and machinery recorded a strong 18 per cent rise over the quarter, rebounding from a 9 per cent fall in September, while imports of consumer goods rose 5 per cent and cars 4 per cent.
The strong increase in imports of consumer goods might be of some concern to the Reserve Bank, said ANZ National bank chief economist Cameron Bagrie.
"However, indicators of retail spending suggest consumers remain restrained and this should flow through into softer import numbers in the months ahead."
Exports to the United States at just over $1 billion in the December quarter were almost unchanged on a year earlier, even though the kiwi dollar had gained 9c or 13 per cent against the US dollar over that period, making New Zealand products more expensive to American importers.
The exchange rate has strengthened further since then and the US is now on the brink of recession, reporting an annualised growth rate of just 0.6 per cent in the December quarter.
Wellington Regional Chamber of Commerce chief executive Charles Finny said that while the surge in dairy exports was positive for our trade balance, that sector could not be expected to turn around New Zealand's huge balance of payments deficit alone.
Bank of New Zealand economist Craig Ebert said the greater-than-expected momentum in exports could reduce the current account deficit to 6 per cent of gross domestic product this year, from 8.2 per cent of the year to last September.
Ins and outs
* Trade gap narrows as dairy exports rebound to top $1 billion in December.
* Exports to US hold up - so far - despite a tougher exchange rate and faltering US growth.
* Shipments from the Tui field provide some offset to a bigger oil import bill.
