New Zealand's merchandise exports rose to their highest monthly level in more than three years in May as the country benefited from rising prices for dairy exports to China.
Exports rose 8.7 per cent to $4.95 billion in May compared with the same month a year earlier and marking the highest monthly level since March 2014, according to Statistics New Zealand. Dairy exports led the rise, with the value lifting 42 per cent, or by $342 million, to $1.16b.
New Zealand's exports of milk powder, butter and cheese have increased for an eighth consecutive month as global dairy prices improve, boding well for improved payouts to farmers which will boost the local economy. Exports to China, New Zealand's largest market, jumped 17 per cent in May to $969m, led by a 76 per cent increase in dairy products.
"Higher world prices for milk powder helped boost export values in recent months," said Stats NZ international statistics senior manager Daria Kwon. "Exports of dairy commodities to China led the increase in values."
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Exports of meat and edible offal, the country's second-largest commodity export, rose for a fifth consecutive month, advancing 4.5 per cent to $693m. Lamb exports advanced 8 per cent, while beef exports increased 3.5 per cent. Both rises were price-driven as beef quantities fell 15 per cent and lamb declined 1.2 per cent, Stats NZ said.
Meanwhile, exports of logs, wood and wood articles, the third-largest group, advanced 2.3 per cent to $376m.
On the other side of the ledger, goods imports into New Zealand rose 15 per cent to $4.85b in May, led by a 65 per cent increase in shipments of crude oil. Stats NZ noted they were imported in large, irregular shipments which could cause large fluctuations in the data. Imports of passenger motor cars rose 23 per cent, while imports of machinery and plant increased 13 per cent.
"Robust imports are a sign of economic strength, as the booming NZ economy pulls in additional resources," ASB Bank senior economist Jane Turner said in a note. "Over the past year, Stats NZ noted that plant and machinery imports (which include items such as cranes and excavators) have increased 13 per cent. Meanwhile, population growth is fuelling demand for cars, with passenger motor car imports up 23 per cent over the past year.
"Strong imports, combined with continued growth in NZ's exports, highlight the robust footing of the NZ economy. Over the coming year, NZ's strong export prices relative to low import prices will provide an income boost to the economy and be a key driver of growth going forward."
New Zealand had a monthly trade surplus of $103m, or 2.1 per cent of exports. This is lower than the average surplus of 5.7 per cent of exports for the previous five May months, due to higher-than-average import values, Stats NZ said.
The annual trade deficit for the year ended May widened to $3.75b, from the $3.62b shortfall in the year ended April.