New Zealand recorded a small trade surplus in July, with shipments of dairy products to China making up for weaker exports to Australia, Indonesia and India.

The surplus was $15 million last month, down from a revised $287 million in the previous month, according to Statistics New Zealand. Exports slipped to $4.03 billion from $4.18 billion, while imports gained to $3.99 billion from $3.89 billion.

The annual deficit was $853 million, or 1.8 per cent of exports. Economists had forecast a monthly surplus of $33 million and an annual gap of $820 million, according to a Reuters survey.

Total exports to China rose 39 per cent in July from a year earlier while exports to Australia fell 7.4 per cent, reflecting a drop in crude oil and refrigeration equipment.


In the 12 months ended July31, exports to Australia edged up 0.1 per cent to $10.39 billion, keeping New Zealand's nearest neighbour firmly at the top of the table. Exports to China rose about 11 per cent to $6.26 billion and shipments to the US grew 4.5 per cent to $4.1 billion. Japan was in fourth place, with exports rise in 0.2 per cent to $3.4 billion.

Australia took 22 per cent of New Zealand's total exports of $49.98 billion in the latest year, which was up 1.6 per cent from a year earlier.

China remained the biggest source of imports for New Zealand in the 12 months ended July 31, rising 8 per cent to $7.7 billion, for a trade deficit in China's favour of $1.46 billion. Australia sent $7.38 billion of merchandise imports, up 0.3 per cent while shipments from the US fell 6.9 per cent to $4.7 billion.

In terms of New Zealand's main commodity exports, dairy products rose 4.3 per cent to $11.89 billion in the 12 months through July while meat and edible offal fell 5 per cent to $5.1 billion and logs and wood articles fell 4.3 per cent to $3.1 billion. Crude oil exports fell 2.9 per cent to $1.98 billion.

"Strong dairy production has underpinned the recent recovery in exports and return to a (seasonally-adjusted) trade balance surplus in recent months," said Jane Turner, economist at ASB.

"How well dairy exports hold up over the coming year will largely depend on weather conditions and pasture growth for the upcoming season," she said. "In the near term, we expect further flow through from past falls in (spot) dairy prices to weigh on exports. But from 2013, we expect dairy prices will recover."