New Zealand's monthly trade deficit widened more than expected in September as falling prices for logs and dairy products weighed on exports while imports were boosted by an incoming aircraft.
The country's trade deficit widened to $1.4 billion in September, from a revised August deficit of $489 million and a shortfall of $221 million in the same month a year earlier, according to Statistics New Zealand. That was nearly double the $700 million deficit forecast in a Reuters poll of economists. Excluding large one-off items September's trade balance deficit of $919 million, the largest for any September month since 2008, Statistics NZ said.
Exports fell 5.3 per cent to $3.61 billion from the same month a year earlier, just above the Reuters forecast of $3.5 billion. Imports rose 23 per cent to $4.97 billion, beating the $4.2 billion expected in the Reuters poll. Excluding large aircraft, imports rose 13 per cent to $4.5 billion.
New Zealand has benefited from strong terms of trade this year as demand for dairy products and logs in China bolstered exports, while a historically high kiwi dollar keeps down the cost of imported goods. Dairy and log prices have since fallen from their highs, easing the country's trade outlook.
Today's figures show falling exports was led by a 31 per cent drop in logs, wood and wood articles to $250 million in September from the same month a year earlier, with pine logs falling 39 per cent. Dairy products, including milk powder, butter and cheese, fell 12 per cent to $798 million with whole milk powder dropping 28 per cent. Meat exports rose 11 per cent to $331 million from September a year ago.
Imports were bolstered by large capital item purchases with transport equipment jumping 591 per cent from the same month the previous year to $614 million, including an aircraft from the US. Car imports gained 31 per cent to $371 million, with a boost from Japanese car arrivals, Statistics NZ said.
China remained the country's largest trading partner although New Zealand slipped into a trade deficit with Asia's largest economy, from a small surplus in September a year earlier. Chinese imports rose 9.6 per cent in the month from a year earlier to $865 million, while New Zealand's exports to the country declined 30 per cent to $568 million, as the difference in dairy prices weighed on the value of the country's exports.
Exports to Australia slipped 4.9 per cent to $803 million in September from a year earlier, while imports from across the Tasman gained 15 per cent to $607 million. Exports to the US rose 7 per cent to $302 million, and imports from the world's largest economy surged 106 per cent to $838 million, reflecting the purchase of an aircraft from that country.
On an annual basis New Zealand remained in a trade surplus of $648 million as exports rose 11 per cent to $51.02 billion in the year, while annual imports rose 5.9 per cent to $50.38 billion. Economists had been predicting an annual surplus of $1.51 billion.
New Zealand posted a trade deficit of $2.79 billion in the three months ended September 30 as exports fell 1.2 per cent to $10.81 billion and imports gained 3.1 per cent to $13.59 billion.