NZ records $882m trade deficit

New Zealand continued its recent trend of posting larger than expected monthly trade deficits.

Statistics New Zealand said today the October deficit was $882m -- $100m above forecasts.

The monthly deficit blew out the October year deficit to $6.12 billion -- the worst on record. It was running at $3.90 billion a year earlier and $5.77 billion in the September 2005 year.

The previous worst annual deficit was $5.81 billion in the year to August 2005.

The monthly trade deficit equated to 35.9 per cent of exports. The average trade balance for an October month for the past 10 years is a deficit of $462 million (20.2 per cent of exports).

Imports increased $316m (10.4 per cent) over October 2004 to $3.34 billion.

Driving the increase were higher values for aircraft and parts, valued at $330m. This was due primarily to the importation of two planes.

Exports fell by $30m, 1.2 per cent, to $2.46 billion from October last year. The main contributors to the reduced exports value were wood and wood articles; aircraft; and ships and boats. Partly offsetting these was a higher value for meat.

UBS economist Robin Clements said the data was consistent with a deteriorating trend.

"It's still suggesting that we're slipping further into the red on the external accounts, so the imbalances, if you like, continue."

ASB economist Anthony Byett said the most interesting aspect was that imports were up 10 per cent on last year with no sign of them slowing.

"That suggests that the investment spree is still going on.

"It doesn't offer any evidence that the consumption spree has probably also ended, so it just puts the pressure back on the Reserve Bank.

"The weak export figure just reinforces what pain that causes and will cause in the next 12 months. Given that they (the Reserve Bank) are in the mood to tighten, it just reinforces that attitude."

- NZPA