February's surplus biggest

Dairying boosted the country's primary exports to their largest ever February trade surplus, with both exports to and imports from China rising, while former top trading partner Australia booked declines in both areas.

The goods trade balance for February, again recognising China as the top export destination, provided an $818 million surplus, equivalent to 18% of exports.

SNZ industry and labour statistics manager Louise Holmes-Oliver said dairy's rise last month was supported by logs and meat, with much of the increase in those commodities destined for China.

Exports were up 17%, by $663 million to $4.6 billion and imports rose 8%, by $277 million to $3.7 billion, the latter led by an $85 million increase in petroleum-related products, Statistics New Zealand data showed yesterday.

ASB rural economist Nathan Penny said after recording a string of annual deficits, from April 2012 through to December 2013, the annual trade balance was ''back well into the black''.

''And with demand for New Zealand commodities extending its amazing run well into 2014, we expect a good run of trade surpluses to follow.

''New Zealand's trade balance surplus is surging,'' Mr Penny said.

China was the ''common denominator'', having for the year accounted for $10.9 billion, or more than a fifth of New Zealand's exports.

''The value of annual exports to China was up 53% from a year earlier,'' he said.

Westpac senior economist Anne Boniface said the strong dairy exports remained an important driver for export growth, the data also featuring higher meat and logs exports.

''China has become an increasingly important destination for many of New Zealand's key commodity exports with strong demand supporting higher prices,'' she said yesterday.

For the 12 months to February, the surplus stood at $649 million.

While exports were led by dairying, up 38% or by $433 million, there was at the same time a 4.8% decline in the quantities.

Ms Boniface said the higher international prices for New Zealand's key commodity exports had boosted domestic incomes, particularly in the rural sector.

'' We expect this to be reflected in the broader New Zealand economy in a range of ways this year, including via higher consumption and investment spending,'' Ms Boniface said.

Last week, New Zealand and China agreed to allow direct trading between their currencies, adding to a surge in trade links since a free trade agreement was signed in 2008, BusinessDesk reported.

The Reserve Bank governor, Graeme Wheeler, yesterday noted the deeper relationship and said the bank was reviewing its exchange rate measures, which it hoped to complete before the end of the year.

- simon.hartley@odt.co.nz


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