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Terms Of Trade Rise

Overseas Trade Indexes: September 2000 (provisional)

The terms of trade for merchandise rose by 5.5 per cent in the September 2000 quarter, latest Overseas Trade Indexes released today by Statistics New Zealand show. A rise in the terms of trade means that more imports can be funded by a fixed quantity of exports. The terms of trade index is now at its highest level since the March 1995 quarter.

The rise in the merchandise terms of trade this quarter was due to the increase in merchandise export prices being more than double the rise in import prices. This is the second consecutive quarter the merchandise terms of trade index has increased. In contrast, the services terms of trade index fell 4.1 per cent this quarter because services import prices rose more than services export prices.

A lower New Zealand dollar against our main trading partners was one of the main contributors to the increases in most import and export prices. Merchandise export prices rose 10.9 per cent in the latest quarter. This is the largest quarterly increase since the September 1984 quarter and the sixth consecutive quarter that export prices have increased. Price increases occurred in all the main export commodities this quarter except for apples.

Merchandise import prices rose 5.1 per cent in the September 2000 quarter. The lower New Zealand dollar against all major trading partners' currencies and higher world crude oil prices were the main contributors to the increase. Excluding mineral fuels, the imports price index would have risen 3.3 per cent in the latest quarter.

Total merchandise export volumes recorded a seasonally adjusted decrease of 2.1 per cent this quarter. Increased volumes of dairy products and fish exports were offset by falls in wool and meat volumes. Falls in the volumes of exports of non-food manufactured goods and forestry products were also recorded.

Seasonally adjusted merchandise import volumes fell 1.3 per cent in the September 2000 quarter. The fall follows an increase of 6.8 per cent last quarter. The volumes of intermediate goods rose 0.1 per cent, consumption goods rose 1.0 per cent and capital goods (excluding transport equipment) fell 0.2 per cent. Volumes of capital transport equipment and passenger motor cars imported also fell this quarter.

The price indexes for services exports and imports both increased in the September 2000 quarter with exchange rate movements and rising fuel prices having the most impact on the indexes. Import prices for services rose 5.9 per cent and export prices rose 1.6 per cent in the September 2000 quarter.

Ian Ewing DEPUTY GOVERNMENT STATISTICIAN

END


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