Trade stats come in better than expected - highest surplus since 2002

New Zealand posted a $324 million trade surplus last month, the largest surplus for a March month in dollar terms since 2002.

Statistics New Zealand (SNZ) said exports for the month were up 17.7 per cent from a year earlier to $4.04 billion - the first time exports topped $4 billion in a March month.

Imports were up 6.9 per cent to $3.72b, also the highest value for any March month.

Darren Gibbs, Deutsche Bank chief economist, said that while many nations have reported a sizeable decline in exports receipts in recent months, the latest trade report highlighted "the relative resilience of New Zealand's trading goods sector".

Both exports and imports were "considerably stronger that market expectations", with export receipts topping $4 billion in a single month for the first time ever.

ASB economist Jane Turner also said that overall the March quarter trade balance came in better than expected - due to imports falling faster than exports.

"Imports have fallen sharply due to the rapid decline in oil prices and collapse in demand for vehicles. Imports are likely to continue weakening along with the decline in domestic demand," she said.

"NZ export values remain supported by strong volumes of commodity exports, as well as the exchange rate helping to support some commodity prices," said Turner.

"Strong volumes of agricultural products are likely to be masking the underlying weakening in demand for NZ exports, which is more apparent in the decline in some international commodity prices (i.e. dairy) and we are also likely to see lower volumes of manufactures exports over this year."

The global nature of the economic recession would limit New Zealand's ability to stage an export led recovery, said Turner.

Electrical machinery and equipment imports had the biggest increase from a year earlier, up $84m or 29.1 per cent, led by equipment for wind-powered electricity generation.

The March trade surplus equates to 8 per cent of exports, compared to the average balance for March months in the preceding five years of a 0.5 per cent deficit.

The annual trade deficit for the year to March worsened to $4.8b from a deficit of $4.53b a year earlier, but was an improvement on the $5.16b deficit in the February year.

The overall result was better than expected, mostly because economists were expecting exports to be lower. The median forecast in a Reuters poll had been for exports $600m below the actual figure.

Other key increases in exports last month were preparations of cereals, flour and starch, which lifted $62m or 115 per cent from a year earlier led by milk-based nutritional powder.

Fruit was up $41m or 58.1 per cent, helped by increased prices for royal gala apples and an earlier start to the kiwifruit season.

The biggest decline in exports last month was in aluminium and aluminium articles which dropped $49m or 39.6 per cent.

For imports, the second biggest rise in March was in mechanical machinery and equipment which increased $77m or 16.7 per cent led by a $41m increase in turbine parts.

The biggest fall was a $184m or 42.7 per cent decrease in vehicles, parts and accessories. Passenger car imports fell $153m or 55.9 per cent from March 2008, while goods transport vehicles were down $38m or 46.2 per cent.

Petroleum and products imports fell $59m or 8.5 per cent, as a $203m fall in crude oil was substantially offset by a rise in other petroleum products, SNZ said.

For the March quarter, the seasonally adjusted value of exports fell 4 per cent, following an increase of 2.7 per cent in the December quarter.

Milk powder, butter and cheese had the largest decrease, down 9.8 per cent mainly due to lower prices, despite a 17.2 per cent rise in quantities, SNZ said.

Aluminium and aluminium articles dropped 42.5 per cent due to lower quantities and prices, while wood articles were down 11 per cent due to lower prices.

Crude oil exports, which are not seasonally adjusted, fell 46.1 per cent on lower quantities and prices.

The value of imports fell a seasonally adjusted 12.8 per cent in the March quarter, the largest fall since the series started in 1988.

Crude oil imports fell 52 per cent as continued price decreases coincided with a drop in quantity, SNZ said.

The seasonally adjusted trade balance for the March quarter was a deficit of $65m, the smallest since the June 2002 quarter. It is equivalent to 0.6 per cent of exports, compared to an average 13.8 per cent of exports since December 2001, the last quarter to show a surplus.

- NZPA