New Zealand's monthly trade deficit was the biggest in almost five years in August as the one-off arrival of a drilling platform skewed imports, and export growth was minimal in a month where the country's food safety was under heightened global scrutiny.
The monthly deficit widened to $1.19 billion in August from $771 million in July and $812 million a year earlier, according to Statistics New Zealand. That was the biggest ever deficit for the month of August, and the widest monthly shortfall since September 2008. Economists polled by Reuters were predicted a monthly deficit of $743 million.
The annual deficit widened to $2.06 billion from $830 million in July, more than the $1.62 billion shortfall predicted.
Exports increased 0.6 per cent to $3.33 billion in August from a year earlier. That reflected a 45 per cent gain in international sales of logs, wood and wood articles to $385 million and a 51 per cent lift in aluminium and aluminium articles to $133 million, offset by a 1.8 per cent dip in milk powder, butter and cheese exports to $577 million, an 8.4 per cent decline in meat and edible offal to $273 million, and a 37 per cent slide in crude oil to $79 million.
Foreign sales of preparations of cereals, flour and starch dropped 28 per cent to $52 million in August. That was led by infant food preparations in a month when Chinese regulators tightened up quality control and as the country's biggest company, Fonterra, was caught up in a contamination scare that proved to be groundless.
Imports advanced 9.7 per cent to $4.52 billion in August from a year earlier, bolstered in part by a $195 million one-off import of a drilling platform, one of three due to arrive in New Zealand waters in coming months. Mechanical machinery and equipment imports rose 13 per cent to $572 million, vehicles, parts and accessories climbed 25 per cent to $598 million, and fertilisers more than tripled to $99 million.
"While imports were boosted by a large one-off item for the second straight month, the underlying picture is still of a strong uplift in business investment, which had been through something of a flat patch over the year to June," Westpac Bank senior economist Michael Gordon said in a note. "This actually bodes well for future growth in New Zealand, though it will weigh on the trade balance in the meantime."
Second-quarter gross domestic product figures last week showed a 5.7 per cent lift in business investment to $7.75 billion, led by gains in transport equipment and other construction, such as infrastructure.
China continued its growing dominance among New Zealand's trading partners, with exports to the world's most populous nation up 21 per cent to $545 million in August from a year earlier and imports up 38 per cent to $958 million.
With exports to nearest neighbour Australia down 12 per cent to $722 million and imports down 9.1 per cent to $576 million in the month, China has more annual two-way trade at about $16.11 billion compared to Australia's $16 billion.