New Zealand recorded a smaller-than-expected trade surplus last month as exports including crude oil and meat missed estimates, offset by a drop in imports.
The trade surplus was $71 million in May, for an annual deficit of $869 million, according to Statistics New Zealand. A monthly surplus of $400 million was expected for an annual deficit of $520 million, according to a Reuters survey.
The trade-weighted index edged up to 73.50 after the figures were released from 73.46 immediately before. The Reserve Bank says a strong kiwi dollar is constraining the export sector while keeping a lid on imported inflation. The TWI was 10.4 per cent higher in May than the same month a year earlier.
The trade figures show trade with China helped underpin the trade balance in the latest month and year, being the only nation among New Zealand's top five markets to buy more of the nation's exports.
China took 15.3 per cent more exports at $669 million, for an annual jump of about 30 per cent to $7.6 billion, remaining the second largest market for New Zealand goods. For imports, China remains the largest source, with inbound shipments increasing 0.5 per cent to $653 million and rising 1.6 per cent to $7.76 billion annually.
Shipments to Australia, the nation's biggest export market, fell 16 per cent in May from a year earlier to $751 million. Exports declined 8.6 per cent to $9.58 billion in the year, adding to signs demand may be waning across the Tasman as the economy slows.
Imports from Australia fell 13 per cent to $585 million in May from a year earlier and fell 3.6 per cent to about $7 billion in the year. Exports to the US, Japan and South Korea all fell.
Total exports were $4.08 billion in the month, missing the Reuters survey forecast of $4.45 billion, while imports of $4.01 billion were a tad down on the forecast $4.05 billion.
Dairy products remain the biggest export, rising 1.5 per cent to $931 million in May from the same month last year and falling 0.7 per cent to $11.46 billion in the 12 months ended May 31. Meat stayed in second place, falling 14.2 per cent to $489 million in the month and rising 2.6 per cent to $5.26 billion in a year.
Exports of logs jumped 22 per cent to $317 million in May and gained 11 per cent to $3.3 billion in the year, while crude oil shipments tumbled 48 per cent in May to $109 million and dropped 16 per cent to $1.69 billion in the year.
Petroleum products were New Zealand's biggest import in May, falling 21 per cent to $703 million from a year earlier and declining 3.2 per cent to $8.1 billion in the 12 month period. Mechanical machinery imports fell 15per cent to $494 million in the month and fell 3 per cent to $5.8 billion in the year.
Exports of dairy, meat, wool, forestry, horticulture and seafood are forecast to reach $24.1 billion in the year ending June 30, 2014, and grow at a compound annual rate of 7.4 per cent to reach $29.5 billion by 2017, according to the Situation and Outlook for Primary Industries 2013. Demand from Asia, improving global growth and a weaker kiwi dollar, will drive the gains.
The bullish outlook for growth is driven by the dairy sector, with a modest increase in cow numbers and productivity lifting exports by 8 per cent to $14 billion in 2014 and an average 8 per cent growth rate through 2017, when exports are forecast to be $17.7 billion, the report said.