New Zealand's June trade surplus was larger than market
expectations but warnings of a significant deterioration in the
country's export figures came with the release of the latest
The June trade data showed an eighth successive surplus of
$247 million. On a seasonally adjusted basis, the June trade
balance continued to moderate, falling $34 million from May
to $174 million for the month.
Total June exports fell 0.7% in value in seasonally adjusted
terms from May. This was largely due to a 4.7% fall in dairy
export values. With dairy export volumes actually rising for
the month, the dairy export value drop was owing to a price
fall of more than 7%.
In other sectors, meat export values rebounded strongly from
May, rising nearly 9% in June. Forestry values were largely
BNZ economist Doug Steel said the outlook was for a sharp
deterioration in the nation's external accounts.
There were hints of the deterioration in Statistics New
Zealand June figures.
While June exports were 5% higher than the same month last
year, annual growth was a marked slowdown from the positive
double-digit pace seen through each of the first five months
of the year.
''We think annual export growth will turn negative during the
second half of 2014, as the likes of lower dairy product and
log prices filter through the official statistics.''
New Zealand's exports to China also showed a stark contrast
between very strong past performance with signs of softness
now creeping in, he said.
Reflecting the past year's buoyancy, the value of New Zealand
exports rose an ''astounding'' 50%. That was part of the $3.1
billion trade surplus New Zealand had run with China over the
past 12 months and a stunning turnaround from the peak $3.8
billion trade deficit back in 2008, Mr Steel said.
But in a clear hint change was under way, New Zealand exports
to China for the month of June were 1.5% lower than for the
corresponding month a year earlier.
Mr Steel repeated Westpac's long-held view the likes of
merchandise trade, terms of trade and current account
statistics would all show deterioration in the coming year.
''That forms part of our view the New Zealand dollar is more
likely to fall than not in the year ahead.''
It was also the reason why the Reserve Bank increased the
intensity of its frustration with the level of the dollar at
Thursday's official cash rate announcement, he said.