Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Deutsche Bank: NZ Overseas Trade Indexes - Sept Q

Data Flash (New Zealand)
NZ Overseas Trade Indexes - Sept Q 1999

Key Points

New Zealand's terms of trade rose by 3.5% in Q3, with export prices rising by 3.0% and import prices falling by 0.4%.

Export prices were 1.1% higher than a year ago, while import prices were 0.6% lower.

The volatile export volume series was 4.5% above the September 1998 level, reflecting the ongoing external sector recovery.

Import volumes increased by 18.4% since Q3/98, due to continued strong domestic demand.

The differential volume growth between export and imports has been offset only marginally by improving terms of trade and led to the significant widening of the merchandise trade deficit over the past year.

Analysis

Today's data confirmed that the export recovery gained momentum in Q3, with both volumes and commodity prices showing an upward trend. That is consistent with our view that a strengthening export sector performance will lift the NZ economy to 4% growth in 2000.

On the import side, the plausibility of the data has to be questioned. The extremely strong volume increase (7.7% qoq seas. adj.) and the 0.4% fall in import prices at a time when the NZ TWI weakened by 4.2% raises the question of whether the appropriate price/volume split has been applied to the nominal trade data.

It appears difficult to explain the following inconsistencies:

Import prices fell, while the September quarter PPI input data showed a massive rebound (+1.4% qoq) over the same period.

The price of imported capital goods fell for the second quarter in a row by over 5%, while the Capital Goods Price Index recorded continued price rises in that area.

Prices of imported cars have supposedly fallen by 3.6% in the September quarter, while the NZ car industry in early October announced an average 2% increase in car prices as a result of the sharp drop in the NZD/Yen cross rate.

Recent business surveys show that the upturn in pricing intentions is based on higher cost pressures, which are directly related to imported goods.

In summary, at face value the import price data compares favourably with the RBNZ's assumptions built into the November forecasts. However, it is likely that the Bank will also apply a degree of skepticism. The volatility in the data suggests a high risk of a significant rebound next quarter, fuelled by another 30% rise in oil prices that has not yet made it into the official statistics.

Nevertheless, today's data has added another element to the list of arguments against a cash rate move on 19 January. Despite a strong economy, the RBNZ may come to the conclusion that there is not sufficient evidence of stronger-than-expected inflation pressures. Given the changed political environment, it is unlikely that the RBNZ, at this particular juncture, would want to expose itself to the criticism of being overly zealous.

ENDS

This, along with an extensive range of other publications, is available on our web site http://research.gm.db.com

In order to read our research you will require the Adobe Acrobat Reader which can be obtained from their website http://www.adobe.com for free.

For answers to your EMU questions, check Deutsche Bank's EMU web site http://www.db.com/emu or email our helpline business.emu@db.com.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Media Mega Merger: StuffMe Hearing Argues Over Moveable Feast

New Zealand's two largest news publishers are appealing against the Commerce Commission's rejection of the proposal to merge their operations. More>>

Elsewhere:


Approval: Northern Corridor Decision Released

The approval gives the green light to construction of the last link of Auckland’s Western Ring Route, providing an alternative route from South Auckland to the North Shore. More>>

ALSO:


Crown Accounts: $4.1 Billion Surplus

The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says. More>>

ALSO:

Mycoplasma Bovis: One New Property Tests Positive

The newly identified property... was already under a Restricted Place notice under the Biosecurity Act. More>>

Accounting Scandal: Suspension Of Fuji Xerox From All-Of-Government Contract

General Manager of New Zealand Government Procurement John Ivil says, “FXNZ has been formally suspended from the Print Technology and Associated Services (PTAS) contract and terminated from the Office Supplies contract.” More>>