NZ terms of trade fall in third quarter

New Zealand's terms of trade fell more than expected in the third quarter as petrol drove up import prices.

The merchandise terms of trade fell 3.7%, following a gain of 1.5% three months earlier, Statistics New Zealand says.

A drop of 2.8% was expected for the third quarter, according to a Reuters poll.

The nation's terms of trade reached a 40-year high last year as the kiwi dollar climbed above 88USc, making imports cheaper and offsetting the impact of falling commodity prices. Since then the currency has retreated to trade recently at 65.84c.

The trade-weighted index fell 8.4% in the third quarter, the biggest decline since 2008, which drove up both import and export prices, the government statistician says.

The value of exports rose 6.5% to $12.3 billion in the third quarter from three months earlier, as volumes rose 3.7% and prices gained 3.4%.

Meat export prices rose 8.1% to a record high in the third quarter, driven by beef prices, while volumes climbed 9.8%. The value of meat exports rose 16% to $1.9 billion. Prices, volume and value of beef exports all reached a record in the latest quarter, while lamb also rose on those three measures.

Forestry product export prices rose 7.5%, while the volume fell 1.2%. The value of forestry exports rose 5.2%. Dairy export prices fell 0.1% in the quarter, while the volume rose 11% and the value gained 9.7%.

The value of imports rose 7.2% to $13 billion, as prices rose 7.3% and volumes edged up 0.7%.

Petroleum and petroleum product prices gained 13% in the quarter while volumes dropped 21% to a five-year low. The value of petroleum imports fell 10%. Statistics New Zealand says a maintenance shutdown at the Marsden Point refinery in May explains volatility in volumes, which jumped in the second quarter.

Prices of imported capital goods rose 7.9% in the quarter, while the volume rose 45%, mainly reflecting aircraft imports.

Consumption goods import prices rose 7% to a record and volumes gained 3.8%. Prices of intermediate goods imports rose 7.1% and volumes rose 1.1%, led by primary fuels.

The services terms of trade fell 5.4% in the latest quarter as import prices rose 7.3%, outpacing a 1.6% gain in export prices.

(BusinessDesk)