August trade deficit $725m, worse than expected

New Zealand posted a worse than expected trade deficit of $725 million in August, with the value of both exports and imports more than 20 per cent lower than a year earlier.

Imports were a little above expectations at $3.47 billion, while exports came in at $2.74b, below the $3.1b median expectation in a Reuters survey of economists. The median forecast for the trade deficit was $273m.

Publishing the data today, Statistics New Zealand (SNZ) said the trade deficit for August amounted to 26.4 per cent of the value of exports, compared with an average August deficit of 34.1 per cent of exports for the previous five years.

Exports were down $830 million, or 23.2 per cent, from a year earlier, the largest percentage fall in exports from 12 months earlier since 1986.

Export values fell across most of the top 40 commodity categories, with the largest decline in crude oil which fell $177m or 50.9 per cent mainly due to lower prices.

Meat and edible offal was down $125m or 32.2 per cent last month from August 2008, led by exports of frozen beef and sheep cuts. Overall quantities of meat and edible offal were down about a third from a year earlier, SNZ said.

Despite overall quantities being almost 30 per cent higher, the value of milk powder, butter and cheese fell $118m or 24.8 per cent.

Increases in exports were fewer and smaller, with fruit showing the largest rise, up $11m or 7.8 per cent from a year earlier, led by an $8m or 5.8 per cent increase in kiwifruit.

Exports last month were back to a level similar to August 2007, before the large value rises seen in dairy and crude oil exports in the latter half of 2007 and during 2008, SNZ said.

Imports were down $953m or 21.6 per cent last month from August 2008, with crude oil imports down $360m or 56.7 per cent, mainly due to lower prices.

Capital goods imports were down $292m or 35.4 per cent, led by transport equipment and a one-off import of large aircraft a year earlier. Passenger cars were down $71m or 26.6 per cent.

For the year to August the country had a trade deficit of $2.37b or 5.6 per cent of exports. As a percentage of exports, that was about a third of the average of 16 per cent for the preceding five August years.

In the three months to August exports were down $1.4b or 13.6 per cent from a year earlier to $9.2b, while imports were down 16.7 per cent to $10.4b.

- NZPA