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


NZ terms of trade at 37-year high on strong dairy prices

NZ terms of trade climbs to 37-year high, driven by dairy export prices

Sept. 1 (BusinessDesk) – New Zealand’s terms of trade – the amount of imports that can be funded by a fixed quantity of exports – rose to its highest level in 37 years in the second quarter, driven by gains in export prices of dairy products, petrol products, meat and wool.

The terms of trade climbed 2.3% to 1295 in the three months ended June 30, reflecting a 1.8% increase in export prices and a 0.5% decline in prices of imports, according to Statistics New Zealand. That marked the seventh consecutive quarterly rise to the highest level since the first quarter of 1974.

The quarterly data coincides with a season in which Fonterra Cooperative Group is paying farmers a record $8 to $8.10 before retentions for the milk and share of other earnings. Global commodity prices have been soaring on demand and reached a record high in May, based on the ANZ Commodity Price index, which has edged lower in the past two months.

“We have a positive medium-term outlook for the terms of trade and see it remaining high relative to history,” said Philip Borkin, economist at Goldman Sachs & Partners New Zealand. Still, “we do believe it is now close to a near-term peak and will moderate slightly over the next two years as export prices retreat from current high levels.”

Borkin said there are signs the rural sector is starting to spend and invest more rather than simply paying down debt, which should yield “positive growth multipliers” for the wider economy.

In the latest quarter, dairy prices rose 4.5%, petroleum products rose 12.8%, meat gained 2.9% and wool was up 12.2%

The decline in import prices was led by a 3.4% drop in prices for mechanical machinery, a 4% fall in electrical machinery, a 2.3% slide in transport equipment and a 2.4% decline in food and beverages, Statistics New Zealand said.

Export volumes rose 0.5% in the second quarter, as a 5.6% gain in meat and an 18% jump in fruit made up for a 3.6% decline in volumes of dairy products, a 4% drop in forestry volumes and a 6.4% decline in volumes of petroleum products.

Import volumes fell 2.4%, the first decline since the second quarter of 2009, with a drop in aircraft imports and fuel cited as the drivers.

The terms of trade for services fell 0.9%.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Maritime Union: Calls For New Zealand Shipping To Resolve Supply Chain Crisis

The Maritime Union says there needs to be innovative responses to ongoing shipping congestion. Maritime Union of New Zealand National Secretary Craig Harrison says it is essential that New Zealand develops its own shipping capacity... More>>

Greenpeace: Calls Foul On INEOS Rugby Sponsorship Deal

Greenpeace is calling foul on NZ Rugby’s decision to sign a sponsorship deal with the oil and plastic polluting petrochemical giant INEOS. "In the thick of the climate crisis, it’s gutting to see NZ Rugby sign a sponsorship deal with an oil and gas polluting conglomerate... More>>

Stats NZ: Quarterly Inflation Rising Steadily Across The Board

Higher prices for transport and food have driven up inflation for the all households group in the June 2021 quarter, Stats NZ said today. The ‘all households group’ represents all private New Zealand-resident households... More>>

Real Estate: June Home Transfers Remain High
There were 44,517 home transfers in the June 2021 quarter, the highest June quarter figure since 2016, Stats NZ said today. The number of home transfers was very similar to the March 2021 quarter and was up 18,252 from the June 2020 quarter... More>>

Statistics: Household Saving Falls In The March 2021 Quarter

Saving by New Zealanders in the March 2021 quarter fell to its lowest level in two years after rising sharply in 2020, Stats NZ said today. Increases in household spending outpaced income growth, leading to a decline in household saving from the elevated levels that prevailed throughout 2020... More>>