Annual trade balance of $4.44b highest in nine years

The oil tanker Matuku, capable of carrying 50 million litres of fuel, pictured at dawn heading towards Dunedin's upper harbour. Photo / Simon Hartley

New Zealand's annual trade balance has hit a nine-year high of $4.44 billion, with export volumes stronger than expected by the market.

Oil prices and a weakened New Zealand dollar were contributing factors. Imports and exports were both up for the year to July, but the deficit widened because imports rose more, Statistics NZ international statistics manager Tehseen Islam said.

Annual imports for the year to July were $60.7b, up $6.9b or 13 per cent from the previous year, while annual exports were $56.2b, up $5.7b.

"The rise in imports in the past year reflect large rises in both imports of petroleum and products, and in mechanical machinery and equipment."

Exports of dairy and meat products led the exports rise.

The deficit for July was $143 million, narrower than market analysts' picks of deficits between $400m and $500m.

ASB senior economist Mark Smith said the annual $4.44b deficit saw imports grow 13 per cent, which outstripped the export growth of 11 per cent.

"Looking at the year ahead, we expect the annual trade deficit to narrow gradually," Smith said.

The low import figures appeared to be largely attributable to the Marsden Point shutdown for maintenance, with oil import values down 8.2 per cent, seasonally adjusted, on the month.

"Despite this, higher prices for crude oil and the weaker New Zealand dollar contributed to imports of petroleum and products hitting $6.5b for the July 2018 year, a 30 per cent increase on the year prior," he said.

Westpac senior economist Michael Gordon said New Zealand's trade deficit for July of $143m was better than expected but was partly offset by a downward revision for June.

Seasonally adjusted exports jumped 6.3 per cent in July, with a sharp rise in volumes across most commodities. This suggests the strength in July may have been a matter of timing, with more shipments than usual during the month.

"There was also a strong lift in dairy export prices for the month, but recent dairy auctions indicate that this will soon reverse," Gordon said.