26 Feb 2016
NZ trade balance positive, but... - ANZ
Analysts at ANZ noted the NZ trade balance and broke it down in detail.
Fully Quoted:
"A $8m trade surplus was recorded in January, which was better than median market expectations of a $271m deficit. There were modest surprises on both the export and import side (the latter higher and the former lower than expected). In seasonally adjusted terms, a $106m deficit was recorded. This is the eighth consecutive deficit, but actually the smallest recorded over that period.
Seasonally adjusted export values rose 9.5% m/m. A key contributor to this strength was fruit exports, which surged 49% in the month. Anecdotes for the horticultural sector have certainly been strong, but we suspect a lot of this strength reflects timing and is unlikely to be sustained. Dairy export values also rose 2.7% m/m, while dairy volumes were effectively flat, implying a modest lift in implied NZD prices. Again, this may not be sustained given recent weaker GDT outcomes.
Seasonally adjusted import values rose 6.0% m/m, and comes despite a sharp fall in petroleum imports (which are admittedly volatile). In seasonally adjusted terms, we estimate that capital goods imports fell a further 4%, while immediate imports rose 5.3% m/m. The underlying trend for import values has been broadly stable for the past few months, which considering the impact of weaker oil prices, highlights a degree of resilience overall.
Despite today’s positive surprise, the overarching themes dominating the external trade environment remain: ongoing falls in export prices, softer agricultural production (although not as soft as earlier envisaged) and weak oil prices. Some of these factors offset, but ultimately we continue to expect the underlying trend in New Zealand’s external trade performance to be one of deterioration."
Fully Quoted:
"A $8m trade surplus was recorded in January, which was better than median market expectations of a $271m deficit. There were modest surprises on both the export and import side (the latter higher and the former lower than expected). In seasonally adjusted terms, a $106m deficit was recorded. This is the eighth consecutive deficit, but actually the smallest recorded over that period.
Seasonally adjusted export values rose 9.5% m/m. A key contributor to this strength was fruit exports, which surged 49% in the month. Anecdotes for the horticultural sector have certainly been strong, but we suspect a lot of this strength reflects timing and is unlikely to be sustained. Dairy export values also rose 2.7% m/m, while dairy volumes were effectively flat, implying a modest lift in implied NZD prices. Again, this may not be sustained given recent weaker GDT outcomes.
Seasonally adjusted import values rose 6.0% m/m, and comes despite a sharp fall in petroleum imports (which are admittedly volatile). In seasonally adjusted terms, we estimate that capital goods imports fell a further 4%, while immediate imports rose 5.3% m/m. The underlying trend for import values has been broadly stable for the past few months, which considering the impact of weaker oil prices, highlights a degree of resilience overall.
Despite today’s positive surprise, the overarching themes dominating the external trade environment remain: ongoing falls in export prices, softer agricultural production (although not as soft as earlier envisaged) and weak oil prices. Some of these factors offset, but ultimately we continue to expect the underlying trend in New Zealand’s external trade performance to be one of deterioration."