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NZ February trade balance beats market estimates; exports likely to continue growth over coming months, says ANZ Research

New Zealand’s trade balance for February was stronger than expected with exports above expectations and imports aligned with expectations. Lamb exports were at record levels while logs exports were also very strong. Exports are expected to continue to grow in the coming months, according to the latest report from ANZ Research.

The unadjusted monthly trade balance hit a small surplus in February of $12 million in January. Exports at $4.8 billion were above expectations, with lamb exports at record levels. Imports were aligned with expectations at $4.8 billion.

On a seasonally adjusted basis, exports increased 7.7 percent m/m. Dairy volumes lifted 10.8 percent on the back of higher milk intakes earlier in the season. Meat volumes were up 6.4 percent as dry conditions encouraged a lift in meat processing, following a slower than normal start to the processing season.

The volume of logs exported shot up by a massive 51.7 percent following weaker volumes in prior months – so this strong result is partially due to timing of shipments, but it does also indicate China’s demand for logs remains robust.

Seasonally adjusted imports rose 0.7 percent m/m. Petrol imports dropped 26 percent following a smaller downward adjustment the previous month. Machinery imports were also weaker down 11.6 percent m/m. More textiles (+6.4 percent) and electrical goods (+5.6 percent) were imported in February.

On a regional basis, exports to China continued to trend up. Exports to China in February were 32.5 percent higher than the previous February. Year to date exports are now up 16.1 percent. Exports to South Korea are also in double digits for the year to date, up 10.1 percent.

"Further surpluses are expected as the year progresses reflecting ongoing strength in export volumes of meat and dairy products. The recent lift in dairy prices is yet to flow through to export values but this should start to occur in the coming months," ANZ Research further commented.

Image Courtesy: ANZ Research

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