Surprise January trade surplus recorded

Photo / Kenny Rodger

The merchandise trade balance for January 2010 was a surplus of $269 million, Statistics New Zealand said today.

"As a percentage of exports this is the biggest trade surplus for a January month since 1989," a spokesperson said.

"Until this year, deficits had been recorded for the previous eight January months."

Exports for January were $3.2 billion, down $19 million compared with January 2009, while imports were $2.9 billion, down $390 million.

The main commodities contributing to the fall in imports were automotive diesel (down $105 million); mechanical machinery and equipment (down $102 million); and electrical machinery and equipment (down $79 million). Crude oil (up $106 million) was the main commodity to show an increase.

Results for exports were mixed, with 24 of the top 40 export commodities recording decreases for the January 2010 month.

ASB Bank economist Jane Tuner said the trade balance was "a surprisingly robust surplus" - much stronger than the $100m deficit market expectation.

"Relative to expectations exports were significantly stronger, while imports were slightly weaker.

The almost $400m surprise saw the annual balance improve to a deficit of just $178m. This represents a dramatic turnaround in NZ's trade position over the past year, underscored by solid agricultural export performance and weak import demand.

Over 2010, we expect these trends to begin to reverse. Nonetheless, this improvement creates a solid starting point, which should flow through to a smaller current account deficit in 2010."

Tuner said that relative to the bank's own forecasts, exports were slightly stronger across the board, although dairy was the stand-out performer.

"The pick-up in dairy prices observed in spot markets over the second half of 2010 are now likely to be flowing though to dairy export receipts. In addition, volumes appear to be holding up relatively well despite anecdotes of poor weather related production conditions reported throughout the season."

She said the trade balance "continued its recent trend of surprising on the strong side, helping to rapidly shrink the annual trade deficit."

Deutsche Bank economist Darren Gibbs said he was estimating that GDP will likely rise around 0.8-1.0 per cent (quarter-on-quarter) in the present quarter, a step up on the 0. per cent growth that he estimates occurred in the fourth quarter of last year.

This GDP figure will be published on March 25.

INTEREST.CO.NZ