NZ trade deficit smaller than expected in July on gains in fruit, meat exports

Worsening terms of trade are tipped to push the current account deficit up towards 5 per cent of GDP by the end of this year. Photo / Richard Robinson

New Zealand's trade deficit was smaller than expected in July as exports of fruit and meat drove overseas sales higher, and offset flat dairy export receipts.

The trade deficit narrowed to $649 million in July from $943 million a year earlier, and was smaller than the $755 million shortfall predicted in a Reuters poll of economists.

Exports climbed 14 per cent to $4.2 billion from a year earlier, underpinned by a 24 per cent gain in foreign meat sales and a 51 per cent jump in fruit exports.

Imports were up 4.8 percent to $4.85 billion. On an annual basis, the trade deficit was $2.69 billion, ahead of the forecast $2.66 billion.

New Zealand's export sector has been weighed on by tumbling global milk prices, which have sapped returns for local producers. Dairy is New Zealand's biggest commodity export, and international sales of milk powder, butter and cheese edged up 0.1 per cent to $932 million in July from a year earlier, for an annual drop of 24 per cent.

Casein and caseinates sales rose 6.8 percent to $95 million, for a 9.2 per cent annual increase.

Exports in the month of July were bolstered by sales of meat and edible offal, the country's second-biggest export commodity, which rose to $505 million in July from $406 million a year earlier, and were up an annual 15 per cent.

Fruit exports climbed to $311 million in July from $206 million a year earlier, led by the country's record kiwifruit crop.

Imports of cars, autoparts and accessories, were down 12 percent in July to $573 million, slowing the annual gain to 5.6 per cent.

Imported petrol and products sank 27 per cent to $513 million in the month, for an annual drop of 22 per cent as globally low oil prices hold down fuel costs.

Exports to China, the country's biggest trading partner, rose 14 per cent in July to $695 million, underpinned by sales of frozen beef.

Sales to China fell 28 per cent on an annual basis as the world's most populous nation scaled back its purchases of New Zealand dairy products.

Imports from China climbed 28 per cent to $898 million in July, for a 15 per cent annual increase.

Trade with the US increased in July, with exports up 30 per cent to $479 million, largely on increased beef sales, and imports rising 8.9 per cent to $665 million.

On an annual basis, exports to the US climbed 31 per cent, and imports gained 20 per cent.

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