The terms of trade eased 0.7 per cent in the September quarter in a sign that it may be about to get harder for the country to earn its living as a trading nation.
It measures relative prices of the kinds of things we export as against the kind of things we import.
The September quarter's decline means that 0.7 per cent fewer imports of goods could be funded by a fixed quantity of exports.
But the decline was from what had been a 37-year high in the June quarter.
The terms of trade have climbed by more than 20 per cent over the past two years, boosting national income.
"We now believe the terms of trade have peaked," Goldman Sachs economist Philip Borkin said.
"Previously strong national income growth has made the process of deleveraging less painful.
"Slowing national income growth makes that process more challenging."
Export prices fell 4 per cent in the quarter, while the trade-weighted exchange rate rose 4.2 per cent over the same period.
That implies export prices overall held up in world price terms.
But the statistics reflect contract prices in Customs documentation at the wharf, which lag behind changes in spot prices on the commodities markets.
ANZ's export commodity price index has been falling since May.
Dairy prices fell 4.8 per cent in the quarter to be down 4.2 per cent for the year, Statistics New Zealand said, though they had doubled over the two years before that.
Forestry prices fell 9.1 per cent in the quarter, making a decline of 4.8 per cent for the year.
"This is consistent with weaker demand from China which has become a key market for forestry exports, with reports suggesting this market has become oversupplied," ASB economist Jane Turner said.
Import prices fell 3.4 per cent, which is less than the exchange rate rose.
The biggest price fall was in mechanical machinery, down 6.5 per cent in the quarter, making a decline of 15 per cent for the year.
Perhaps for that reason, imports of capital goods, excluding transport equipment, have risen 22 per cent in volume terms over the past year to a three-year high.
"This is a very good sign for business investment and general confidence in the economic recovery, which we still see as firmly intact," said Bank of New Zealand economist Craig Ebert.
"The dip in the terms of trade is essentially just noise, to our mind, around what amounts to a 37-year high in the nation's international purchasing power."
Institute of Economic Research principal economist Shamubeel Eaqub sees export-led growth as vulnerable, both because of a deteriorating world economic outlook and because it has been narrowly based in terms of commodities and export destinations.
Dairy products and forest products accounted for just over half of the annual average growth in export receipts over the past year.
Weaker exchange rate makes up for export commodity prices drop
Export commodity prices dropped in December for the sixth month in a row, ANZ's index shows, but a weaker dollar took the sting out of the fall.
The 1 per cent decline in world price terms means the ANZ commodity price index has fallen nearly 9 per cent from its peak in May.
Of the 17 commodities tracked, 12 fell and only one rose (whole milk powder by 4 per cent). Butter fell 6 per cent, cheese and aluminium 5 per cent, and wood pulp and wool 4 per cent.
The weaker NZ dollar more than offset the declines and in local currency terms the index was up 1.2 per cent, still 10 per cent off its peak in March.
Overall, export prices remain high, according to ANZ economist Steve Edwards. In local dollar terms the index was 27 per cent above the 10-year average between 2000 and 2009, he said, and in world price terms 65 per cent higher.
