-Jason Attewell, international statistics manager at Statistics New Zealand
New Zealand trade balance narrowed in May, as purchases of vehicles overseas cause a higher-than-excepted rise in imports, while shipments declined over the observed period. Nevertheless, the reading came above analysts' estimates, while smaller surplus was expected both by the RBNZ and investors. That is why market reaction was muted and NZD/USD was still trading around recent high at 0.8781, just slightly below strong resistance at 0.8793.
On Thursday, Statistics New Zealand said that nation's trade surplus narrowed to 285 million New Zealand dollar in May, while annual surplus stood at 1.37 billion the same month a year earlier. Despite a decline, annual reading still stood at the highest since November 2010. Exports totalled 4.6 billion, 13% higher than a year ago, however, just 4% higher on a monthly basis. Moreover, a report showed that prices for dairy and other commodities have fallen sharply, data that echoes with RBNZ projections. In contrast, exports to China– Kiwi's main goods exports partner, increased by 204 million to 868 million over the observed period. Imports stood at 4.3 billion, both higher on an annual and monthly basis.
New Zealand economy has been aided by the Christchurch rebuild as well as a surge in demand from Asian countries. However, May's reading only bolsters the case the RBNZ will take a pause in July.
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