Trade balance fell, while business confidence rose to 3-year high

New Zealand's trade balance unexpectedly fell last month as meat and crude oil exports declined sharply. The trade surplus came in at $NZ71 million in May for an annual deficit of $NZ869 million, up from NZ$694 million a month earlier, Statistics New Zealand said. The reading was below the consensus forecast of NZ$427 million, as a strong local currency is constraining the export sector, which shrank a seasonally adjusted 2.7% to NZ$4.08 billion. However, the value of imports dropped 3.9% to NZ$4.01 billion, driven by declines in petrol and mechanical machinery. Nevertheless, economists expect an increase in domestic demand and exports amid improving global growth, rising demand from Asia and a weaker kiwi dollar.

Meanwhile, business confidence rose to a three-year high in June as firms became more optimistic about future operating conditions, ANZ said Thursday. In June 50.1% of businesses see general business conditions getting better over the year ahead, up from 41.8% in the previous month. The highest sentiment was observed in the construction sector, where 73.4% expect better times ahead for the nation's economy, followed by services at 55.2%, retail at 51.5% and agriculture at 39.6%.