Overseas Trade Price, Volume and Terms of Trade

Overseas Trade Price, Volume and Terms of Trade Indexes: December 1999

Export Improvement Price Driven

Figures released today by Statistics New Zealand show that the increase in merchandise export values in the December 1999 quarter was due to increased export prices, which rose by 3.2 per cent. Seasonally adjusted export volumes fell 1.9 per cent this quarter.

Merchandise exports price indexes have risen for the third consecutive quarter and have been generally increasing since June 1997 quarter. The latest increase reflects continued higher prices for certain basic commodities such as forestry products, fish and crude oil and some recovery in wool prices. Also contributing to the latest increase in prices was the lower New Zealand dollar against our major trading partners.

When seasonal variation is removed, total merchandise export volumes fell 1.9 per cent in the December 1999 quarter. The index has been volatile in the 1999 calendar year, fluctuating from quarter to quarter. Most seasonally adjusted volume indexes fell, with the largest falls in fish, wool and non-fuel crude materials. Dairy product volumes continue to rise due to good growing conditions experienced this season.

The merchandise imports price index rose strongly by 5.5 per cent this quarter, influenced by a continuation of increasing crude oil prices and the depreciation in the New Zealand dollar. As expected, petroleum and plastic prices (both products use crude oil) rose this quarter due to restrictions in international crude oil supply over the 1999 year and the lower New Zealand dollar. The imports price index has risen strongly since the March 1997 quarter and is now at its highest recorded level. A small fall in prices for electrical machinery was the only significant exception to the across-the-board increases.

Seasonally adjusted total merchandise import volumes recorded an increase of 14.0 per cent in the latest quarter. However, the seasonally adjusted total merchandise import volumes would have been flat without the importation of the frigate HMNZS Te Mana and aircraft.

Export and import prices for both the merchandise and services indexes increased strongly this quarter. Prices of exports of services rose by 1.7 per cent and prices of imports of services rose by 2.2 per cent. Both merchandise and services terms of trade indexes fell this quarter, because import prices rose more than export prices. The merchandise terms of trade index fell 2.2 per cent and the services terms of trade index fell 0.4 per cent this quarter.

Exchange rate movements contributed to the rises in both export and import services indexes, with the New Zealand dollar depreciating against all major currencies in the December 1999 quarter. The exchange rate effect has less influence on services export prices as many of the services such as travel are transacted in New Zealand dollars.

Len Cook GOVERNMENT STATISTICIAN
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