Bigger deficit on weak dairy exports

A weakness in dairy export volumes has led to a larger-than-expected trade deficit.

New Zealand booked a larger-than-expected trade deficit in August, largely due to a temporary weakness in dairy export volumes.

Analysts noted New Zealand usually posts a trade deficit in August, as agricultural exports wane over winter, but the $1.23billion deficit was larger than expected.

Exports totalled $3.68billion for August while imports were $4.92billion, leaving a $1.23billion deficit; while the market had expected a $825million deficit.

Statistics New Zealand international statistics senior manager Daria Kwon said imports rose by $301million, or 6.5% to reach $4.92billion, led by an increase in the value of crude oil; up $147million or by 93%.

''Imports of crude oil and other petroleum products tend to move up and down from month to month, depending on the timing of shipments,'' she said.

ASB senior rural economist Nathan Penny said the larger-than-expected trade deficit was largely due to weakness in dairy export volumes.

''In seasonally adjusted terms the dairy export volumes dipped a massive 38%, the largest fall since 1991.''

That followed a ''large run up'' in dairy export volumes previously; which between March and June rose 33%.

''As dairy production picks up over the new season, dairy export volumes will recover,'' Mr Penny said.

He predicted annual trade balance narrowing during the remainder of the year on the back of a firm lift in agricultural export volumes.

Westpac senior economist Michael Gordon said much of the turnaround was due to the sharp drop in the volume of dairy exports, which were down 38% in seasonally adjusted terms.

''This is very likely to be a timing issue; dairy export volumes were unusually high in the previous two months, so we can reasonably expect a pickup in the September export figures,'' Mr Gordon said.

SNZ's Ms Kwon said milk powder, butter, and cheese, New Zealand's single biggest export commodity group, fell $12 million, or 2.6%, in August compared with a year ago.

Kiwifruit exports rose $73million to $268million, up 37% on August last year
''The rise was the leading contributor to an increase of $306million, or 9%, in overall goods exports, which was $3.68billion in August,'' she said.

''This annual increase in kiwifruit exports was led by gold kiwifruit, in particular to China,'' Ms Kwon said.