New Zealand's annual trade deficit was the smallest its been in almost six years in May, with the gap between exports and imports narrowing by $1.1 billion compared to April's annual numbers.
Exports were up 1.3 per cent at $60.09 billion in the 12 months through May, with gains in the value of dairy and meat products more than offsetting annual declines in exports of logs and wood products, according to Stats NZ figures.
At the same time, imports were down 5.4 per cent at $61.41 billion, with declines in cars, parts and petrol among the chief drivers.
That left the annual trade deficit at $1.33 billion in May.
International statistics manager Darren Allan said low imports over the past two months led to the narrowing of the annual trade deficit.
Merchandise export values were down 6.1 per cent in May from the same month a year earlier, while monthly imports at $4.1 billion were 25.6 per cent lower than in May 2019. On a monthly basis, the trade balance was a surplus of $1.25 billion.
ASB Bank economist Mark Smith said this reflected "a combination of supply disruptions and heightened caution over the economic outlook."
Smith said the monthly goods surplus was slightly weaker than market expectations.
While seasonally adjusted month-on-month imports rose 5.1 per cent, underlying levels remained weak with strengthening oil prices and firming demand reflected in a 50 percent jump in petrol product import values. Still, "they remain less than half last May's level," Smith said.
The biggest monthly drop was in motor vehicles and parts sector, down more than 61 per cent at $451 million compared to a year earlier.
Reflecting the covid-19 response, NZ imported $154 million of face masks through April and May, while exports of respiratory equipment more than doubled to $49 million.
Monthly log exports, while down 12 per cent or $41 million compared to May 2019, had shown a rebound from the April month, up by $199 million on the strength of resumed logging.
Stats NZ's Allan said log prices had also climbed to $184 a cubic metre last month, reflecting resurgent Chinese demand for NZ trees.
ASB's Smith said the bank expected to see solid demand for NZ's commodity-based exports to hold up merchandise export values, with "patchy domestic demand" expected to cap demand for imports.
"All up, the return to an annual merchandise trade surplus is not far off given recent events."