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Record monthly exports of milk powder, butter and cheese, and crude oil helped push New Zealand exports up by more than a quarter in October from a year earlier.
Despite that, the trade deficit for the month came in at a worse than expected $690 million, partly due to an oil rig being imported, figures published today by Statistics New Zealand (SNZ) show.
The monthly deficit was equivalent to 20.1 per cent of exports, the lowest for an October month since 2001 and below the 24.3 per cent average for the past decade of October months.
It took the annual deficit to $5.8 billion -- 16.4 per cent of exports -- from $6.46 billion a year earlier.
The median of economists' forecasts in a Reuters poll was for an October deficit of $550m and an annual deficit of $5.63b.
Merchandise imports were up 5.7 per cent from a year earlier to $4.11 billion -- the first time monthly imports topped $4b -- with big rises in mineral fuels and machinery and transport equipment.
The value of ships, boats and floating structure imports was up $159m from October 2006, primarily due to the import of an oil rig, while imports of petroleum and products were up $96m led by fully refined regular petrol and crude oil.
Exports were up 26 per cent, compared to October 2006, to $3.42b. The milk powder, butter and cheese category of exports increased $328m from October 2006 to $878m, SNZ said. Whole milk powder contributed $181m of the increase.
Quantities were also up, but to a much lesser extent, indicating higher export prices.
Recent increases in domestic oil production continued to flow through into exports, with petroleum and products up $251m from a year earlier.
At $314m, the value of petroleum and product exports was a record for any month.
The largest offsetting decrease in exports was a $36m drop in meat and edible offal, while the logs, wood and wood articles, and wood pulp and waste paper categories were both down around $20m.
ASB treasury economist Daniel Wills said the import of the oil rig accounted for the October monthly deficit being larger than economists had expected.
Outside dairy and oil, export growth had been slow to flat as the strength of the New Zealand dollar put pressure on export receipts. Other export groupings had also yet to benefit to the same extent from rises in global commodity prices.
Still high import levels, set against patchy export growth, should see the annual trade deficit fall only gradually in coming quarters, Mr Wills said.
The current account was likely to moderate slowly until a sustained export growth recovery was seen, but that was unlikely until next year at least while the NZ dollar remained near historic highs.
For the three months to the end of October, exports were up 9 per cent on the same period in 2006 to $9 billion.
Petroleum and products exports were up $514m, milk powder, butter and cheese up $329m, meat and edible offal down $127m and logs, wood and wood articles down $42m.
Imports for the three months rose 1.9 per cent to $11.2b with ships, boats and floating structures up $166m, vehicles, parts and accessories up $99m and mechanical machinery and equipment up $94m.
- NZPA
