New Zealand Needs Break Trade Balance Good Sentiment Bad

By FXEmpire.com

New Zealand’s trade balance was back in surplus in February, though the government statistician said weaker than expected imports and exports may have been impacted by escalating industrial action around the country.

The trade balance was a surplus of $161 million in February, turning from a revised deficit of $159 million a month earlier, according to Statistics New Zealand.

That was in line with the predicted surplus of $153 million in a Reuter’s survey of economists.

In spite of the above forecast trade balance report, the quarterly Westpac McDermott Miller Regional Economic Confidence survey showed net confidence fell from 6% positive at the end of 2011 to 3% in the March survey.

The figures in the survey represent the net difference between those who expected good or bad economic times in their region over the coming year, with a score of zero representing a balance between optimists and pessimists.

Within the survey there were major differences between regions exposed to the dairy industry and those which are not.

Trade balance data showed a change in the balance between dairy and non dairy products and also a huge drop in imports from the US.

Dairy products account for about 26% of New Zealand’s annual exports worth $47.87 billion.

Dairy prices have been falling on Fonterra’s online trading platform, and this week dropped to the lowest level since August 2010.

Dwindling prices and a resiliently high kiwi dollar prompted Fonterra to cut its forecast pay-out to farmers this season.

Exports fell 6.9% to $3.59 billion while imports dropped 6.6% to $3.43 billion – short of expectations of $4.01 billion and $3.65 billion respectively.

Statistics NZ said the industrial disputes may have impacted values by delaying the loading and unloading of vessels.

The annual trade balance was a surplus of $621 million, in line with the forecast surplus of $621 million.

A slump in the value of exported crude oil led the decline in international sales, with crude oil exports down 53% to $94 million in February compared to the same month a year earlier.

Some 91,000 tons of crude oil was sold overseas that month, compared to 206,000 in February 2011.

Exports to Australia, New Zealand’s biggest trading partner, dropped 11% to $750 million in February, while sales to China declined 15% to $526 million. Exports to Japan sank 42% to $177 million.

Imports from the US sank 39% to $309 million in February compared to the same month a year earlier, when New Zealand imported capital goods in 2011.

Imports from China fell 4.5% to $542 million in the month, while sales from Australia rose 3.7% to $580 million.

Originally posted here