New Zealand posted its biggest ever trade surplus for the month of February as Chinese demand for local primary products continued to soar.
The trade surplus was $818 million in February, from a revised $286 million surplus in January, and almost twice the $432 million surplus a year earlier, according to Statistics New Zealand. The annual trade balance was a surplus of $649 million, or 1.3 per cent of exports. Economists polled by Reuters were expecting a monthly surplus of $600 million and an annual surplus of $490 million.
Exports climbed 17 per cent to $4.56 billion, for an annual increase of 7.6 per cent to $49.43 billion. That was underpinned by China, with exports to the world's second-biggest economy up 49 per cent to $1.17 billion in February, for a 53 per cent annual gain to $10.93 billion, or 22 per cent of all exports. Imports from China rose 0.7 per cent to $647 million in February, and advanced an annual 6.3 per cent to $8.3 billion.
Sales into China were led by whole milk powder, pine logs and sheep meat, and the world's most populous nation bought about 44 per cent of the New Zealand's milk powder, butter and cheese exports.
"China has become an increasingly important destination for many of New Zealand's key commodity exports with strong demand supporting higher prices," Westpac Banking Corp senior economist Anne Boniface said in a note. "In turn, high international prices for New Zealand's key commodity exports have boosted incomes, particularly in the rural sector."
Last week New Zealand and China agreed to allow direct trading between their currencies, adding to a surge in trade links surge since a free trade agreement was signed in 2008. Reserve Bank governor Graeme Wheeler yesterday noted the deeper relationship and said the bank is currently reviewing its exchange rate measures which it hopes to complete before the end of the year.
New Zealand's milk powder, butter and cheese exports rose 38 per cent to $1.57 billion in February for an annual increase of 26 per cent to $14.45 billion. Casein and caseinates edged up 1 per cent to $100 million in the month, and rose 5.8 per cent to $975 million in the year. Dairy products accounted for about 31 per cent of the nation's annual exports.
Meat and edible offal exports rose 17 per cent to $647 million in February, for a 4.5 per cent annual lift to $5.42 billion, while logs, wood and wood articles climbed 38 per cent to $361 million in the month and 26 per cent to $4.02 billion in the year.
Imports into New Zealand rose 8 per cent to $3.74 billion in February for an annual increase of 3.7 per cent to $48.78 billion.
Imports of petroleum rose 14 per cent to $690 in February, and edged up 0.4 per cent to $8.27 billion on the year, followed by a monthly 7.4 per cent lift in mechanical machinery and equipment to $435 million and a 1.2 per cent annual increase to $6.13 billion. Imported vehicles, parts and accessories rose 6.2 per cent to $443 million in February, and were up 13 per cent to $5.97 billion in the year.
The New Zealand dollar was little changed at 85.91 US cents at 11.25am in Wellington from 85.98 cents immediately before the release.