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Merchandise Prices Fall While Volumes Rise

Merchandise Prices Fall While Volumes Rise

Lower prices caused the decreases in seasonally adjusted export and import values in the December 2002 quarter, according to the latest Overseas Trade Indexes released by Statistics New Zealand. Both seasonally adjusted export and import volumes increased in the December 2002 quarter.

The merchandise terms of trade fell 2.8 percent in the December 2002 quarter, due to export prices falling more than import prices, following a decrease of 1.8 percent in the September 2002 quarter. A fall in the terms of trade means that less imports can be funded by a fixed quantity of exports.

Prices for merchandise exports decreased 5.3 percent in the December 2002 quarter and import prices fell 2.6 percent. The fall in export prices reflects a 4.8 percent rise in the value of the New Zealand dollar in the December 2002 quarter as measured by the trade weighted index (TWI).

Lagged exchange rates set by the New Zealand Customs Service are used in the import values. A TWI calculated from the Customs rates would have risen 2.8 percent in the December 2002 quarter and is reflected in the smaller fall in import prices.

Price decreases for dairy products (down 4.8 percent), meat (down 6.4 percent) and chemical and chemical products (down 7.6 percent) were the main contributors to the fall in export prices in the December 2002 quarter. Price falls were recorded in most of the import series, with lower prices for electrical machinery and apparatus (down 6.1 percent) and mechanical machinery (down 3.6 percent) having the greatest impact.

Seasonally adjusted merchandise export volumes rose 2.2 percent in the December 2002 quarter following little change in the September 2002 quarter. While all of the main sub-indexes rose this quarter, the main contributors were dairy products, non-food manufactures, wool and meat.

Seasonally adjusted merchandise import volumes rose 2.9 percent in the December 2002 quarter, following a 2.6 percent rise in the September 2002 quarter. Merchandise import volumes have shown sustained growth in the latest five quarters. The importation of several large aircraft with a total value over $200 million was the main contributor to the latest rise. Rises were recorded in both the capital goods (up 23.6 percent) and intermediate goods (up 1.3 percent) volume indexes this quarter. Partly offsetting these was a 2.4 percent fall in consumption goods volumes.

The terms of trade for services rose 4.1 percent in the December 2002 quarter recording the fifth consecutive increase. This was due to export prices rising 1.1 percent and import prices falling 2.9 percent in the latest quarter.

Brian Pink

Government Statistician

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