New Zealand's trade deficit widened to the biggest monthly gap since September 2014 as dairy and meat exports slumped in August.
The deficit of $1.27 billion in August was larger than the deficit of $351 million in July and $1.09b in the same month a year earlier, Statistics New Zealand said. Exports sank 8.7 per cent to $3.39b from August 2015, outpacing a 3.1 percent fall in imports to $4.65b.
The country's two biggest export commodities dropped by more than a fifth in August, with milk powder, butter and cheese exports down 22 per cent to $475m in August, and meat and edible offal exports sinking 26 percent to $317m. Fruit exports, which have been propped up by record sales of kiwifruit, fell 11 per cent to $241m. Logs, wood and wood articles helped offset the decline, rising 24 per cent to $399m.
"The large fall in export value this month comes off the back of high export volumes in the June quarter," international statistics senior manager Stuart Jones said. "Logs are the only major commodity to continue high volumes and values through to August."
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New Zealand's exporters have come under pressure from a resurgent currency in recent months, with the New Zealand dollar climbing 6.4 percent on a trade-weighted basis since the start of June and making local goods more expensive on international markets.
The biggest falls in milk powder, butter and cheese products exports were to China and the United Arab Emirates, while the biggest drop in meat exports was to the US and UK.
The decline in monthly imports was led by a 17 percent fall in capital goods such as transport equipment and machinery to $967m and a 38 per cent slump in crude oil to $175m. Imports of vehicles, parts and accessories rose 13 per cent to $767m last month from August 2015.
ASB Bank economist Jane Turner said the deficit was much larger than the market expected, though August is typically a weaker month for New Zealand's agricultural exports.
"The key driver of the surprise for us was weaker exports (in particularly dairy), but imports were significantly stronger than the market was expecting as well," Turner said in a note. "Over the coming year, we expect declines in dairy export volumes as NZ production falls."
On an annual basis, annual exports slipped 0.5 per cent to $47.8b and imports fell 1 percent to $51.93b to post a trade deficit of $3.13b. China was the country's biggest trading partner, accounting for about 19 per cent of two-way trade.
Despite taking less milk powder, butter and cheese, China bought more exports in August, up 2 percent to $634m, and was just one of three of New Zealand's biggest export destinations to increase their purchases from a year earlier.