25 Jul 2014

Little market reaction to trade surplus

8:29 am on 25 July 2014

New Zealand's trade surplus was stronger than expected in June, but financial markets have barely reacted.

The nation's trade surplus was $247 million in June, but export growth has slowed and expected to further deteriorate over the second half of the year.

Exports rose 4.8 percent to $4.2 billion in June, an increase of $191 million from June 2013.

The value of imported goods rose 8.7 percent to $3.9 billion in June, up $314 million.

Strong primary sector production, together with firm pricing, and solid import growth, resulted in the larger-than-expected trade surplus for June.

Westpac economist Anne Boniface said the run of trade surpluses could not be sustained, as long as the dollar remained high and the international prices for New Zealand's key commodities continued to fall.

She said softer commodity prices along with the strong New Zealand dollar would be expected to weigh on exporter's revenues. At the same time, imports remained attractive because the New Zealand dollar remained high and the New Zealand economy continued to grow fairly strongly.

Ms Boniface said on balance that meant there would be smaller trade surpluses on an annual basis going forward.

Export growth has slowed and expected to further deteriorate over the second half of the year.

Export growth has slowed and expected to further deteriorate over the second half of the year. Photo: PHOTO NZ