29 Jan 2013

Dairy export fall pushes down trade balance

12:47 pm on 29 January 2013

A sharp fall in dairy product sales undermined the country's export performance in the final three months of last year.

Exports fell 3.3% in the December quarter - the second biggest quarterly drop since 2009.

The fall was led by an 11.7% drop in overseas sales of milk powder, butter and cheese.

Exports of oil, fruit, wine and machinery were also sharply lower.

Statistics New Zealand the seasonally adjusted trade balance for the December 2012 quarter was a deficit of $87 million.

This follows a $128 million deficit for the September 2012 quarter.

The trade balance for the December 2012 month was a surplus of $486 million

BNZ economist Doug Steel says the fall in dairy exports was not because of a lack of demand, and in fact prices rose during the period.

He said it may be explained by dairy companies holding back products to sell for more later if prices continue to rise.

ASB senior economist Jane Turner said manufacturing exports weakened due to lower demand from Australia and the United States - the two biggest export markets - in the second half of 2012.

She said prospects are expected to improve due to lower interest rates in Australia and less fiscal uncertainty in the United States.

Ms Turner said the high New Zealand dollar will continue to weigh on export returns, though farmers and manufacturers should benefit from a pick up in demand from the country's main trading partners, as well as stronger prices.