The annual trade surplus continued to shrink last month and economists expect the trend to continue.

Exports exceeded imports by $621 million or 1.3 per cent in the year ended February.

That was down on a surplus of $646 million in the year to January, $853 million for calendar 2011 and $765 million for the year to February 2011.

For the month of February there was a trade surplus of $161 million but Statistics New Zealand cautioned that both import and export numbers were affected by the timing of shipments of some key commodities, as well as by disruption at the Ports of Auckland.


Exports last month at $3.6 billion were down 6.9 per cent or $267 million from February 2011.

Whole milk powder exports were down $99 million or 20 per cent.

The timing of shipments imparts a degree of lumpiness to monthly figures for some commodities: aluminium exports were 74 per cent or $79 million lower than in February last year while both imports and exports of oil were about $100 million lower.

In addition, the exchange rate moved up by 8.1 per cent over the year on a trade-weighted basis.

Nonetheless imports were also lower than a year ago, by 6.6 per cent or $244 million, though that is largely explained by $233 million worth of aircraft imported in February last year.

For the three months ended February, imports of plant and machinery were up 9 per cent on the same period a year earlier, crude oil up 17.8 per cent and cars up 8.1 per cent.

Deutsche Bank chief economist Darren Gibbs said the data were consistent with his expectation that the annual trade surplus had peaked.

"A decline in the terms of trade and gradual improvement in import demand, further stimulated by an elevated exchange rate, is likely to see the trade accounts deteriorate over the course of this year," he said.


Bank of New Zealand economist Craig Ebert said the February numbers "caution against getting too excited on the GDP front, while serving as a further warning on the current account deficit's path."

Goldman Sachs economist Philip Borkin said that as the combined effect of lower commodity prices, a high dollar and weaker trading partner growth weighed on the trade balance, the current account deficit should widen further. "We forecast it to reach around 6 per cent of GDP by the end of the year."

ASB economist Jane Turner said strong export incomes over the past year had provided support for New Zealand's gradual economic recovery.

"However support for the export sector is likely to moderate ... particularly as global commodity prices for New Zealand's exports ease back from very elevated levels."