New Zealand's trade deficit narrowed in September as imports and exports across the Tasman shrank, led by falling international dairy sales and declining foreign machinery purchases.

The trade deficit of $791 million in September was narrower than a revised $809 million a month earlier, according to Statistics New Zealand. The shortfall was almost identical to the same month a year earlier, and smaller than the $825 million deficit forecast in a Reuters survey of economists. The annual deficit of $888 million was in line with expectations.

Trade flows with Australia, New Zealand's biggest trading partner, shrank in September, with exports falling 8.3 per cent to $824 million and imports down 13 per cent to $586 million from the same month a year earlier. Statistics NZ said New Zealand sold less unwrought gold, cheese and crude oil to Australia, and bought less cane sugar, aluminium oxide and fertilisers.

China, the country's second-biggest trading partner, picked up the slack, with monthly exports rising 23 per cent to $468 million and imports edging up 1.1 per cent to $718 million.


Exports to the US, New Zealand's third-biggest partner, picked up, rising 12 per cent to $257 million in September, though imports declined 18 per cent to $336 million.

Milk powder, butter and cheese exports fell 12 per cent to $597 million in the month, and aluminium and aluminium articles sales sank 20 per cent to $79 million. Dairy products account for about 27 per cent of New Zealand's annual $46.77 billion in exports.

Imported mechanical machinery and equipment dropped 11 per cent to $472 million in September, while vehicles, parts and accessories fell 8.4 per cent to $406 million.