N.Z. Annual Trade Deficit Narrows to NZ$4.28 Billion

By Tracy Withers

Sept. 29 (Bloomberg) -- New Zealand's annual trade deficit narrowed for a third straight month in August as a falling currency and record oil shipments buoyed exports.

The gap narrowed to NZ$4.28 billion ($2.9 billion) in the 12 months ended Aug. 31 from NZ$4.48 billion in the year through May, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of eight analysts was for a NZ$4.43 billion shortfall.

New Zealand's dollar has slumped 15 percent against the U.S. currency the past six months, buoying exports and helping to narrow the trade gap. Rising prices bolstered shipments of oil, which is now New Zealand's third-largest export after dairy and meat following the commencement of production at the Tui field in July last year.

``There are early signs that the exchange rate is helping, particularly for categories outside dairy, meat and oil,'' said Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland. ``We still have a substantial commodity price story going on.''

The New Zealand dollar bought 68.45 U.S. cents at 11:35 a.m. in Wellington from 68.37 cents immediately before the report.

The currency fell for a sixth straight month on a trade- weighted basis, the statistics agency said.

Exports rose 34 percent in August from a year earlier to NZ$3.57 billion. Economists expected a 22 percent gain.

Imports Rise

Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, increased 78 percent from a year earlier. The increase reflected both price and volume gains, the agency said.

Exports of crude oil more than doubled to a record NZ$343 million. Meat, log and fruit shipments also rose.

Imports rose 20 percent to NZ$4.32 billion in August from a year earlier. Economists expected a 16 percent gain.

The figures aren't adjusted for inflation and reflect higher prices for imports as well as actual shipments. Fuel imports rose 66 percent as prices increased from a year earlier, the statistics agency said.

Machinery imports increased and there were also NZ$160 million of aircraft delivered in the month, the agency said.

Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren't seasonally adjusted. In August, there was a NZ$750 million trade deficit compared with an NZ$947 million gap a year earlier. Economists expected a NZ$926 million deficit.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net