KEY POINTS:
New Zealand oil exports from the new Tui field contributed to an unexpected narrowing of the country's trade deficit last month.
While the trade balance improved, boosted by oil exports and the re-export of an aircraft, it remains deep in the red.
Overall imports, at $3.5 billion, outstripped exports, at $3 billion, but the gap was $300 million less than the markets had expected.
The annual deficit narrowed to $6.25 billion from $6.33 billion in the year ended August, but it still means $1.18 of imports for every $1 of exports.
Exports were 6.4 per cent up on September last year, despite the fact that the dollar has risen 12 per cent in trade-weighted terms in the interim.
For the second month in a row exports were boosted by oil from the new Tui field. Oil exports were $141 million compared with $10 million in September last year.
But imports of crude oil and refined petroleum products were $494 million last month and have averaged $329 million a month over the past year.
As oil exports were small compared with imports, rising oil prices would tend to widen the trade gap, Goldman Sachs JBWere economist Shamubeel Eaqub said.
The monthly export figure was also flattered by a spike in re-exports, most likely related to an unusual $130 million in exports of aircraft and parts.
The underlying picture in the quarterly figures suggests higher prices for dairy products are starting to flow through from the spot market to the value of shipments crossing the wharves. But that is partially offset by the fact that volumes of dairy exports fell on a seasonally adjusted basis.
Higher prices meant that a 16 per cent fall in the quantity of dairy exports in the September quarter only translated into a 2 per cent fall in the value of dairy exports.
Of the eight largest export commodities only fish and fruit were up in volume terms.
"A high currency can easily be blamed for the soft volume growth and at close to 77c against the US dollar it is expected to further weigh on the export sector over the coming months," said ANZ National Bank chief economist Cameron Bagrie.
However there seemed to be a response from the lower exchange rate with the Aussie dollar, he said, with exports to Australia rising 8.3 per cent and imports from Australia falling 4.7 per cent in the September quarter.
Imports last month were 2.9 per cent up on September last year but for the September quarter were down 2.2 per cent on the same period last year.
Imports of consumer goods and of cars, which had softened earlier in the year, recovered.
Eaqub said the economic rebalancing the Reserve Bank was looking for - a shift to growth led by exports rather than domestic consumption - remained elusive.
