Trade figures hit speed bump after strong show

The improvement in the trade balance faltered last month.

As is the normal seasonal pattern, exports exceeded imports in February. But the surplus - $321 million or 10 per cent of imports - was only two-thirds of what the market had expected or what was recorded in February last year.

The annual deficit, which had been shrinking since the middle of last year, widened to $347 million from $186 million in the year ended January.

Exports, at $3.3 billion, were 3.6 per cent lower than in February last year and imports, at $3 billion, 1.3 per cent higher.

That is despite a 23 per cent trade-weighted increase in the exchange rate over the year, which makes exports worth less in NZ dollar terms and imports cheaper.

It was the ninth month in a row exports were down on the same month a year earlier. Meat led the declines, while timber and aluminium rose.

The rise in imports followed 10 months of imports being down on a year earlier. Car imports were up $100 million on their cyclical low a year earlier, but imports of capital goods fell.

Bank of New Zealand economist Craig Ebert said export volumes appeared to be holding up - at least for those categories for which volume information is available.

So the weakness in export receipts was a "none too gentle" reminder of the impact of the strong dollar.

"It's great if if you export to Australia, with [the exchange rate] very much on the soft side of average. But the New Zealand dollar is strong against almost every other currency bar the euro, including Asian ones, as many of them have essentially pegged to the US dollar."

The relative strength of the currency mainly reflected the relative weakness of most trading partners, Ebert said, but that made it no less painful for exporters.