NZ's trade deficit narrows in February

Fonterra milk tankers at their specialty powder and casein manufacturing plant at Longburn, near Palmerston North. Photo / Mark Mitchell

New Zealand's trade deficit narrowed to $18 million in February but the annual trade deficit was the largest in nearly eight years.

The monthly trade deficit was worth 0.5 per cent of exports, which compared to an average surplus of 9.1 per cent of exports for the previous five February months, data from Statistics New Zealand showed. The country had a $257m trade deficit In January. In the 12 months to February, the trade deficit was $3.79 billion, the largest since April 2009. Exports fell 5.5 per cent to $4.0b and the largest decline was in the ships, boats, and floating structures commodity group due to the export of a large drilling platform in February 2016. Excluding the drilling platform, overall exports showed little change, up $35m, or 0.9 per cent, Stats NZ said.

Economists had expected a trade surplus of $180m for the month, based on a Reuters survey.

Milk powder, butter and cheese - the largest export commodity group - rose $55m or 5.6 per cent in February. The largest rise in milk powder exports in February 2017 was to the United Arab Emirates, up $39m or 123 per cent. Exports of milk powder to China, the largest export market for that commodity, were up $15m or 7.2 per cent, despite an 8.1 per cent fall in quantities exported.

"There were mixed results for New Zealand's other export commodities in February 2017," Statistics New Zealand international trade statistics senior manager Daria Kwon said. "Exports of dairy, meat, and fruit were up, but other primary produce exports, including fish, wool, and casein, were down compared with the same month of the previous year."

China remained the country's top export destination in February, up 6.3 per cent while exports to Australia rose 2.1 per cent.

Imports rose 4 per cent to $4.0b but excluding crude oil, the total of all other imported goods rose by only 1.4 per cent, Stats NZ said. Of the three main broad economic categories, intermediate goods rose 7 per cent to $1.7b, capital goods rose 5.7 per cent to $764m while consumption goods fell 8.7 per cent to $1b.

Imports from China fell 10 per cent to $775m, led by a fall in clothing. Imports from the EU rose 2.9 per cent to $680m, led by rises in passenger motor cars and aircraft parts.