Imports rise 14pc in January says Stats NZ

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The total value of goods imported in January increased 14 per cent to $396 million from January 2010, to a montly total of $3.3 billion, Statistics New Zealand said today.

"Higher imports of mechanical and electrical machinery and equipment contributed almost half of this rise in January 2011," overseas trade manager Neil Kelly said.

The total value of goods exported in January 2011 was up $136 million, or 4.3 per cent from January the year before, to $3.3 billion.

This was dominated by a nearly 10 per cent jump in dairy exports.

The January trade balance was a small surplus of $11 million or 0.3 per cent of the value of exports.

ANZ economist Sharon Zollner said this morning's trade balance was close to expectations.

"Both imports and exports were a little weaker than expected. But encouragingly, export values are getting a head of steam up, reflecting record-high commodity prices," said Zollner.

Fundamentals for the export sector remained strong.

ASB economist Jane Turner also said the January trade balance was close to market expectations, with an $11 million surplus.
"Looking ahead, we expect that exports of dairy and forestry will remain robust, underpinned by strong global commodity prices and strong demand from China. Meat exports are likely to be hampered back by weak volumes, despite strong prices," said Turner.

"The underlying fundamentals for manufacturing exports remain robust. However, the recent Christchurch earthquake may see some temporary disruption to exports over February and March."

"Commodity exports continue to perform well, with high dairy prices a large factor underpinning the trade surplus over the past year, said Turner. "As a result, the export sector remains a key driver of economic recovery."

International dairy prices were likely to remain strong over the next year, with large wheat shortages underpinning high grain prices which tend to also be supportive of dairy prices. However, for the broader economy "the trickle down of wealth from higher commodity prices has been muted by producers opting to pay down debt."

Goldman Sachs NZ economist Philip Borkin said exports continue to benefit from high prices, although it will be worth watching to see if the large fall in forestry export volumes was just monthly volatility "or something that proved to be more enduring."

The annual trade balance for the year ended January 2011 was a surplus of $865 million - 2 per cent of exports. This is the first surplus for the year ended January since 2002, said Stats NZ.

- NZ HERALD ONLINE