Terms of trade continue to fall

See also:
Overseas Trade Indexes (Prices): March 2012 quarter (provisional)  –  Information release
Overseas Trade Indexes (Volumes): March 2012 quarter (provisional)  –  Information release

New Zealand's merchandise terms of trade fell 2.3 percent in the March 2012 quarter when compared with the December 2011 quarter, Statistics New Zealand said today.

This is the third consecutive quarterly decrease since the terms of trade peaked in the June 2011 quarter. The 2.3 percent fall means 2.3 percent less imported goods could be funded by a fixed quantity of exported goods than in the December 2011 quarter. The latest fall was due to export prices falling more than import prices.

In the March 2012 quarter, merchandise export prices fell 3.8 percent, reflecting a 5.5 percent appreciation of the New Zealand dollar (according to the Reserve Bank's trade weighted index).

In the March 2012 quarter, prices for exported goods fell for these major commodity groups:

• dairy products (down 5.6 percent) – dairy product exports represented 26 percent of the total value of merchandise exports for the year ended March 2012
• meat products (down 3.6 percent) – 12 percent of exports
• forestry products (down 4.2 percent) – 10 percent of exports.

 

Prices of imported merchandise goods were down 1.5 percent in the March 2012 quarter. The New Zealand dollar's appreciation had less influence on import prices than on export prices, because the exchange rates the New Zealand Customs Service uses for valuing imports are lagged by 11 to 25 days. The fall was influenced by:

• petroleum and petroleum products (down 0.2 percent) – represented 18 percent of the total value of merchandise imports for the year ended March 2012
• transport equipment (down 2.3 percent) – 13 percent of imports.

 

The seasonally adjusted export volume fell 0.6 percent in the March 2012 quarter. The slight fall was mainly due to lower export volumes of petroleum products and fruit.

"The seasonally adjusted dairy export volume was up 11 percent over the past three quarters, offsetting the 11 percent fall in prices," Statistics New Zealand prices manager Chris Pike said.

The seasonally adjusted import volume rose 5.4 percent in the latest quarter. "This is now higher than the previous peak in the June 2008 quarter," Mr Pike said.