Import fall boost for trade balance

By BRIAN FALLOW

Declining imports led to a better than expected trade balance last month.

The $53 million deficit compared with economists' expectations of a $365 million deficit, and a $609 million deficit posted in September last year.

The annual trade balance improved to a surplus of $868 million, compared with a $3.1 billion deficit in the year to September 2000.

Estimated exports at $2.65 billion were little changed from August and up 9 per cent on September last year.

Imports continued to decline, and at $2.7 billion were 11 per cent lower than September last year.

However, the decline may be overstated by the way Statistics New Zealand calculated exchange rate conversions.

Because it used a pre-September 11 rate, it has not yet captured the New Zealand dollar's fall since the attacks, leading to an understatement of import values.

Deutsche Bank economist Darren Gibbs said the attacks might have affected trade flows.

"There's the direct impact due to disruption in air travel and perhaps, late in the month, the cancellation of import orders as businesses became concerned about the impact of the global recession on the outlook for the New Zealand economy."

Imports from the United States were down 41 per cent or $276 million compared with September last year, but most of that reflects the fact that a large aircraft worth more than $200 million was imported in September 2000.

On a seasonally adjusted basis, imports of consumer goods in the September quarter were down 5.4 per cent on June, and imports of cars down 6.2 per cent.

Imports of plant and Machinery were up 2.3 per cent, but have not recovered fully from the sharp decline in the March quarter.

"You would be hard pressed to see any significant pick-up in import activity," ASB economist Anthony Byett said. "We were looking especially for more investment and stock-building, but the import figures suggest it's not happening."

Given the prevailing international risks, the trade data gave the Reserve Bank scant reason not to ease, Mr Byett said.

Mr Gibbs said, "There appears to have been a weakening in the pace of growth in domestic demand over the past month or two, with retail sales, job ads and imports all coming in weaker than earlier in the year."