"It's likely that this monthly volatility largely reflects the timing of shipments. We expect volatility in the trade figures to continue for the next few months as a number of large movements (think drought and large swings in currencies) throw the balance around."
- Michael Gordon, Westpac Banking Corp economist
New Zealand posted its biggest trade deficit in 10 months in July, due to a jump in costs of import, while exports dropped, Statistics New Zealand showed in a monthly report. The nation's trade gap was the worst since 2009, reaching NZ$774 million, exceeding analysts' expectations of a NZ$18 million deficit and much lower compared with the previous month's surplus of NZ$374 million. The main reason for such a weak reading was soaring imports, as the value of imports rocketed 17% in July from the same month a year earlier. Goods received from China shot up 23% annually, while volume of imported goods from the U.S. jumped 24%. Aircraft parts contributed the most to the increase in import, pushing import receipts NZ$276 million higher. At the same time, exports of NZ$3.8 billion trailed the estimates of NZ$3.92 billion, reflecting a 64% drop in crude oil exports and a 13% fall in milk powder, cheese and butter.
While these figures can raise concerns over weak growth figures, New Zealand's trade balance usually turns into a deficit in July, mostly due to seasonal lows in primary produce exports, however, there were registered small surplus in July during the last two years. Moreover, the fact that shipments to Malaysia and Singapore surged 33% and 50% respectively, are suggesting that Asian countries are growing rapidly.
© Dukascopy Bank SA