Imports slump 20pc as trade surplus soars

New Zealand's trade surplus in May was its largest, as a percentage of exports, since 1993 as imports fell heavily.

Statistics New Zealand (SNZ) today said the surplus last month was $858 million, or 21.7 per cent of the value of exports.

The trade balance had been in surplus for four consecutive months, for the first time since 2002, SNZ said.

The value of imports in May fell $809m or 20.7 per cent, compared to a year earlier, to $3.1 billion, while exports rose $218m or 5.8 per cent to $4 billion.

Exports to China accounted for 80 per cent of the May increase, led by milk powder, butter and cheese, and logs, wood and wood articles.

Overall, milk powder, butter and cheese exports rose $131m or 19.4 per cent, compared to May 2008, led by a 104 per cent rise in the amount of whole milk powder exported.

That quantity increase followed lower than usual quantities in May last year, coinciding with drought in the North Island, SNZ said.

ASB Bank economist Jane Turner said the May numbers were "impressive", with the balance of trade continuing to surprise.

"We remain wary on the sustainability of trade surpluses. Import volumes have fallen sharply over the past few months, but are likely to stabilise in the second half of this year, along with the bottoming out in domestic activity," she said.

"Meanwhile, agricultural exports are traditionally seasonally weak over the second part of the year and the underlying weakness in other exports (such as manufactures) is likely to become more apparent."

UBS NZ economist Robin Clements said the trade data revealed a better than expected trade surplus with the surprise coming "entirely on the imports side".
Imports of aircraft and petroleum products were both large items that could be "lumpy" in their timing.

Today's numbers suggest the big fall in imports to New Zealand might be continuing through the year.

The trade figures released today showed pine log exports were up $60m, including a $31m increase to China, while fruit exports were up $54m or 20.3 per cent, led by a $39m price-driven rise in the value of kiwifruit exports.

Crude oil exports fell $90m or 36 per cent, entirely driven by price, with quantities up 18 per cent. Aluminium and aluminium article exports fell $63m or 47.7 per cent.

Among imports, crude oil was down $106m or 32.3 per cent, with cruide oil shipments irregular and the cause of large fluctuations in the data. Capital goods fell $151m or 19.7 per cent, mainly due to a fall in imported aircraft.

Passenger car imports fell $153m or 52 per cent from a year earlier, to a total of $141m. Petrol cars with a 1500-3000cc rating were down $67m, while those above 3000cc were down $45m.

Aircraft and parts fell $86m or 54.9 per cent due to large aircraft being imported last May. Imports of oil cake, used as cattle feed or fertiliser, fell $56m with no oil cake imported last month after being brought into the country in relation to the drought a year ago.

In the three months to the end of May exports were up $661m or 6 per cent to $11.7 billion, while imports were down 12.7 per cent to $10 billion.

- NZPA