Business

Economist expects trade figures to remain volatile

07:03 am on 28 June 2013

Westpac economist Nathan Penny expects trade figures to remain volatile with the impact of the drought on the price of dairy products coming through and imports rising off the back of the Canterbury rebuild.

Official figures show there was a surplus of $71 million for May, while a Reuters poll of economists had forecast a monthly surplus of $400 million.

Exports fell nearly 8% to $4.1 billion, compared with the same month last year, led by crude oil and meat. Imports fell nearly 4% to $4 billion.

There was a fall in exports to four of New Zealand's top five export partners, China was the only destination in the top five where exports rose.

Mr Penny said the value of imports is expected to rise as more materials are brought into the country for the Christchurch rebuild, and the dollar eases.

He said a rebound is expected in the next month or two from the lower surplus, but it's also expected to be particularly volatile due to factors such as dairy prices, export volumes associated with the drought and currency movements.

Mr Penny said further out imports are expected to start increasing in line with more construction activity in Canterbury and towards the end of the year the balance of payments is expected to start worsening.

On a seasonally adjusted basis there was a deficit of $317 million.

And on an annual basis, there was a trade deficit of $869 million.