New Zealand’s June trade surplus trails expectations

New Zealand recorded a trade surplus of NZD 127 million in the month of June. It missed the market projections of NZD 150 million. On an annual basis, the trade deficit narrowed to NZD 3.3 billion from May’s NZD 3.6 billion.

New Zealand’s seasonally adjusted values of exports were a tad lower in June. The valued of exports fell 0.8 percent on monthly basis to NZD 4.25 billion. This maintains certain stability following the extreme volatility witnessed early in 2016, noted ANZ in a research report.

Throughout the categories, dairy export values rose 10 percent on sequential basis, mainly due to a 15 percent month-on-month rise in volumes. Moreover, fruit exports also came in solid in June, rising 7.6 percent month-on-month.

According to Statistics New Zealand, exports of kiwi fruits have been performing well in the recent months. Kiwi fruits exports reached a record high level in June. However, this was countered by subdued values of seafood, meat, electrical machinery exports and forestry.

Meanwhile, the nation’s imports also saw declines in the month of June. Imports fell 1 percent month-on-month to NZD 4.13 billion. Stronger consumption goods and crude oil imports are expected to have been countered by a moderate decline in capital goods imports.

New Zealand’s trade accounts underlying scenario had been pretty good. Strong performance seen in other primary exports sectors assisted in filling the void, in spite of the dairy sector strains. However, looking forward, trade balance is likely to deteriorate modestly in the coming year or so, according to ANZ.

Even if the recent stability in the nation’s broader export commodity prices is encouraging, the terms of trade is still assumed to drop modestly as the effect of earlier weakness in export commodity price continues to flow through and as the effect of slightly higher oil prices stimulates import values, stated ANZ.