Terms of Trade Up for Goods but Down for Services
Stats NZ: Figures released today by Statistics New Zealand show a 3.5 per cent increase in the merchandise terms of trade index and a 3.3 per cent fall in the services terms of trade index.
The merchandise exports price index has risen for the second consecutive quarter and is now at similar levels to March 1995 quarter. The latest increase reflects a continued recovery in prices for certain primary commodities such as meat and forestry products, crude oil, and aluminium prices. Also contributing to the latest increase in prices was the lower New Zealand dollar against our major trading partners.
The merchandise imports price index fell slightly this quarter, despite the depreciation in the New Zealand dollar and the large increase in crude oil prices. The imports price index has been relatively flat since the June 1998 quarter. Lower prices for electrical machinery, passenger motor vehicles and mechanical machinery more than offset higher prices for petroleum (including crude oil) and plastics.
When seasonal variation is removed, total merchandise export volumes have risen 7.5 per cent in the September 1999 quarter. This has more than offset the fall in the previous quarter. Higher seasonally adjusted volumes were seen across-the-board, with the largest increases in dairy products, wool and non-fuel crude materials. Good climatic conditions producing strong grass growth, have contributed to rising export volumes for dairy and meat when compared to the drought stricken quarters of the last year.
Seasonally adjusted total merchandise import volumes recorded an increase of 7.7 per cent in the latest quarter. Some of this increase can be attributed to the importation of large aircraft.
The services imports and exports price indexes both increased in the September 1999 quarter. The increase was particularly strong in the imports price index, which was 3.6 per cent higher. There was a weaker rise in the exports price index of 0.2 per cent. Exchange rate movements are the main contributor to the rise in the imports of services index, with the New Zealand dollar depreciating against all major currencies in the September 1999 quarter. The exchange rate effect has less influence on the services export prices as many of the services such as travel are transacted in New Zealand dollars.