Aircraft imports tip trade balance in NZ

Importing $214 million of aircraft was enough to push the trade balance unexpectedly into the red last month. Imports exceeded exports by $199 million as the country imported $1.05 worth of goods for every $1 of exports. January's deficit, which contrasted with analysts' expectations of a $200 million surplus, cut the annual trade surplus to $646 million from $853 million for the year ended in December. But it is still well above the average annual deficit of $3.1 billion over the previous 10 years. Deutsche Bank chief economist Darren Gibbs said the trade surplus had probably peaked, largely reflecting a moderate decline in the terms of trade and a gradual improvement in import demand further stimulated by an elevated exchange rate. The New Zealand dollar rose 3.6 per cent in the year to January, on a trade-weighted basis. Imports last month at $3.9 billion were 19 per cent higher than in January last year. As well as the aircraft, imports were boosted by another "lumpy" item - a 35 per cent increase in imports of oil and petroleum products, of which 14 per cent was higher volumes and the rest a rise in oil prices. Exports of oil, by contrast, were 41 per cent lower than a year ago. Exports overall at $3.7 billion were 13 per cent higher than in January last year. Exports of milk powder, butter and cheese at $1.3 billion were 25 per cent higher than in January last year, but meat exports were 13 per cent lower. "Seasonally adjusted meat exports by weight have remained extremely weak over the past three months, with the three-month average the lowest since June 1999," said ASB economist Jane Turner. "Strong pasture growth may be encouraging farmers to hold back stock in order to increase weights. "As a result we could see a spike in export volumes in coming months. "Meanwhile, strong export prices for meat have provided some offset to weaker volumes over recent months." On the imports side, China has overtaken Australia as the largest source of imports over the past year. Imports of consumer goods last month were 11.9 per cent higher than in January 2011, but for the three months ended January were only 2.7 per cent higher than in the same period a year earlier. Imports of plant and machinery were 10.4 per cent higher than a year earlier both for the month and for the latest three months - a positive sign for business investment.