Overseas Trade Indexes (Prices): December 2009 quarter (provisional)

Merchandise

Terms of trade

The merchandise terms of trade rose 5.7 percent in the December 2009 quarter due to export prices (down 0.3 percent) falling less than import prices (down 5.8 percent). The latest quarterly rise followed six consecutive quarterly falls and is the largest increase recorded since the March 1976 quarter. In the year to the December 2009 quarter, the merchandise terms of trade index fell 8.3 percent, following rises of 1.8 percent and 8.8 percent in the years to the December 2008 and 2007 quarters, respectively.

The latest quarterly rise in the merchandise terms of trade means that in the December 2009 quarter, 5.7 percent more merchandise imports could be funded by a fixed quantity of merchandise exports than in the September 2009 quarter.

Export prices

The merchandise export price index fell 0.3 percent in the December 2009 quarter, following falls of 5.4 percent in the September 2009 quarter and 11.9 percent in the June 2009 quarter. The latest quarterly fall in the total export price index was primarily driven by lower prices for meat and for fish. Higher prices for dairy products and fruit made partly offsetting contributions to the overall quarterly fall.

The appreciation of the New Zealand dollar had a downward influence on export prices in the latest quarter. The Reserve Bank Trade Weighted Index (TWI) increased 4.6 percent in the December 2009 quarter.

The meat index fell 8.3 percent in the December 2009 quarter, following decreases of 3.3 percent and 7.0 percent in the September 2009 quarter and the June 2009 quarter, respectively. The latest quarterly fall was the largest since a 9.0 percent fall in the December 2005 quarter. Beef and veal (down 14.2 percent) and lamb (down 6.0 percent) were the main contributions to the fall in the meat index. In the year to the December 2009 quarter, the meat index fell 17.1 percent, compared with a 26.2 percent rise in the year to the December 2008 quarter. The latest annual fall was the largest since a 17.9 percent fall in the year to the June 1986 quarter.

The fish and fish preparations index fell 8.2 percent in the December 2009 quarter, following decreases of 9.6 percent in the September 2009 quarter and 8.4 percent in the June 2009 quarter. The latest quarterly fall was driven by lower prices for mussels and rock lobster. In the year to the December 2009 quarter, the fish and fish preparations index fell 19.8 percent, compared with a 31.8 percent rise in the year to the December 2008 quarter. The latest annual fall was the largest since a 23.0 percent fall in the year to the June 1988 quarter.

 

In the December 2009 quarter, fruit prices (up 16.3 percent) made a significant offsetting contribution to the overall fall in export prices. The latest quarterly rise followed decreases of 9.7 percent in the September 2009 quarter and 7.0 percent in the June 2009 quarter. Higher prices for kiwifruit were the key driver of the rise in the fruit index. In the year to the December 2009 quarter, the fruit index rose 1.7 percent, compared with an increase of 13.5 percent in the year to the December 2008 quarter.

 

After three consecutive quarterly falls, the dairy products index rose 5.0 percent in the December 2009 quarter. This quarterly rise followed falls of 11.3 percent in the September 2009 quarter and 24.1 percent in the June 2009 quarter. A price increase for butter (up 17.6 percent) was the main contributor to the latest quarterly rise in the dairy products index. In the year to the December 2009 quarter, the dairy products index fell 43.4 percent, compared with rises of 35.4 percent and 40.4 percent in the year to the December 2008 and December 2007 quarters, respectively.

In the year to the December 2009 quarter, the merchandise export price index fell 23.6 percent. This is the largest annual fall since a 39.0 percent decrease in the year to the March 1952 quarter. The latest annual fall followed increases of 21.4 percent in the year to the December 2008 quarter and 7.3 percent in the year to the December 2007 quarter.

Import prices

The merchandise import price index fell 5.8 percent in the December 2009 quarter, following decreases of 3.9 percent and 2.8 percent in the September 2009 and June 2009 quarters, respectively. The New Zealand dollar appreciated against all of our major trading partners’ currencies, making a significant downward contribution to the fall in import prices. According to exchange rates provided by the New Zealand Customs Service for valuing imports, the trade weighted index of the New Zealand dollar rose 6.1 percent in the December 2009 quarter (including a rise of 10.6 percent against the United States dollar). All of the commodity-group index series included in the tables attached to this quarter's Hot Off the Press fell in price.

Falls in the mechanical machinery index and electrical machinery and apparatus index were the main contributors to the overall fall in import prices in the December 2009 quarter. Price falls in petroleum and petroleum products, and food and beverages also contributed to the fall.

In the December 2009 quarter, the mechanical machinery index fell 8.6 percent, following decreases in the September 2009 quarter (down 11.4 percent) and the June 2009 quarter (down 5.1 percent). Lower prices for portable computers and computer peripheral equipment pushed this index down in the current quarter. (Computer-related producer price indexes from the United States are used as a proxy to measure price change for imported computers. The United States indexes are exchange rate adjusted, and the appreciation of the New Zealand dollar against the United States dollar in the latest quarter had an impact on the fall in computer prices.) In the year to the December 2009 quarter, the mechanical machinery index fell 16.7 percent, following an 18.1 percent rise in the year to the December 2008 quarter and a 13.3 percent fall in the year to the December 2007 quarter.

The electrical machinery and apparatus index fell 10.0 percent in the December 2009 quarter, which was the largest quarterly fall since an 11.6 percent decrease in the March 1978 quarter. The current quarter’s fall followed falls of 3.7 percent and 4.8 percent in the September 2009 and June 2009 quarters, respectively. In the year to the December 2009 quarter, the electrical machinery and apparatus index fell 10.0 percent, following a rise of 8.1 percent in the year to the December 2008 quarter and a fall of 10.2 percent in the year to the December 2007 quarter.

 

The petroleum and petroleum products index fell 4.3 percent in the December 2009 quarter, which made a significant contribution to the overall fall in import prices. This compared with a rise of 17.4 percent in the September 2009 quarter and a fall of 1.0 percent in the June 2009 quarter. Major contributions to the latest quarterly fall came from price falls for crude oil and motor spirit. In the year to the December 2009 quarter, the petroleum and petroleum products index fell 28.4 percent, compared with rises of 20.1 percent in both the years to the December 2008 and December 2007 quarters, respectively.

 

Food and beverages (down 6.9 percent) in the December 2009 quarter also made a contribution to the overall fall in import prices. This fall was the largest quarterly fall since the December 1985 quarter (down 17.6 percent), and followed a fall of 3.9 percent in the September 2009 quarter and a rise of 3.7 percent in the June 2009 quarter. Price decreases for frozen pork, bananas, and wheat were the major drivers of the fall in the latest quarter. The food and beverages index showed a fall of 6.5 percent in the year to the December 2009 quarter, compared with rises of 14.9 percent and 5.9 percent in the years to the December 2008 and December 2007 quarters, respectively. The latest annual fall was the largest since an 8.4 percent decrease in the December 2003 quarter.

The total imports price index fell 16.7 percent in the year to the December 2009 quarter, following a 19.3 percent rise in the year to the December 2008 quarter and a 1.4 percent fall in the year to the December 2007 quarter. The latest annual fall was the largest since the series began in the March 1949 quarter. Import prices are now at levels last seen in the September 2007 quarter.

 

Imports by broad economic category

All three broad economic categories: intermediate goods (down 5.3 percent), capital goods (down 8.5 percent), and consumption goods (down 4.9 percent) fell in the December 2009 quarter. The intermediate goods index was a significant contributor to the 5.8 percent fall in the total imports price index.

 

In the December 2009 quarter, the intermediate goods index fell 5.3 percent, following falls of 2.6 percent for both the September 2009 and June 2009 quarters. All published sub-indexes included in the tables attached to this quarter's Hot Off the Press showed decreases, except processed fuels and lubricants (which showed no change). A 6.9 percent fall in the processed industrial supplies sub-index was the primary driver of the fall in the intermediate goods index. Also contributing to the overall fall was a 5.9 percent fall in the parts and accessories of capital goods and the transport equipment sub-index.

The capital goods index recorded an 8.5 percent fall in the December 2009 quarter. This was the largest quarterly fall since the March 2003 quarter, and followed decreases of 7.2 percent in the September 2009 quarter and 5.2 percent in the June 2009 quarter.  The latest quarterly fall was primarily driven by a 9.1 percent fall in the non-transport equipment sub-index, including price falls for computers and computer storage devices. The industrial transport equipment sub-index also fell (down 6.4 percent).

The consumption goods index showed a fall of 4.9 percent in the December 2009 quarter, following decreases of 6.5 percent and 4.1 percent in the September 2009 and June 2009 quarters, respectively. All published sub-indexes included in the tables attached to this quarter's Hot Off the Press recorded price falls in the current quarter. The fall in the consumption goods index largely came from a 7.0 percent fall in semi-durable goods and a 6.4 percent fall in durable goods.

 

Services

Terms of trade

The terms of trade for services rose 0.8 percent in the December 2009 quarter, following rises of 9.8 percent and 3.8 percent in the September 2009 and June 2009 quarters, respectively. The latest quarterly rise was due to services export prices (down 1.0 percent) falling less than services import prices (down 1.8 percent). In the year to the December 2009 quarter, the terms of trade for services rose 12.3 percent, compared with a 12.2 percent fall in the year to the December 2008 quarter and an 8.9 percent rise in the year to the December 2007 quarter.

Export prices

Services export prices fell 1.0 percent in the December 2009 quarter, following falls of 1.5 percent and 3.3 percent in the September 2009 quarter and June 2009 quarter, respectively. The latest quarterly fall in services export prices was mainly driven by the transportation index (down 3.8 percent) and the other services index (down 4.1 percent, driven by the personal cultural and recreational services sub-index). The travel index (up 1.0 percent, driven by the personal travel sub-index) made a partly offsetting contribution to the overall fall in services export prices.

In the year to the December 2009 quarter, the services export price index fell 5.3 percent, following an 8.6 percent rise in the year to the December 2008 quarter. The latest annual fall was the largest since the series began in the June 1997 quarter.

Import prices

Services import prices fell 1.8 percent in the December 2009 quarter, following falls of 10.3 percent in the September 2009 quarter and 6.9 percent in the June 2009 quarter. The main contribution to the overall fall in services import prices came from the travel index (down 3.8 percent, driven by the personal travel sub-index).

In the year to the December 2009 quarter, the services import price index fell 15.6 percent, compared with a rise of 23.7 percent in the year to the December 2008 quarter. The latest annual fall was the largest since the series began in the June 1997 quarter.

 

Exchange rate movements

According to the exchange rates published by the Reserve Bank of New Zealand (see table 6), the trade weighted index (TWI) of the New Zealand dollar rose 4.6 percent in the December 2009 quarter. In this quarter, the New Zealand dollar appreciated against four of our five major trading partners’ currencies, excluding the Australian dollar (down 1.0 percent). The greatest appreciation was against the British pound (up 8.6 percent), followed by an 8.1 percent appreciation against the United States dollar.

Exchange rates used in the calculation of merchandise import values differ from the weekly exchange rates used in the calculation of merchandise export values. Import values are converted from foreign currencies using exchange rates set by the New Zealand Customs Service (NZCS) every two weeks. These exchange rates are prepared 11 days before the effective date and are then applied for two weeks. Therefore, the NZCS rates of exchange lag from 11 to 25 days compared with exchange rates published by the Reserve Bank.

 

For the December 2009 quarter, the NZCS TWI recorded a 6.1 percent rise, with the New Zealand dollar rising against our five major trading partners’ currencies.

The appreciation of the New Zealand dollar has a downward influence on both import and export prices in New Zealand dollars. In the December 2009 quarter, the downward influence of the Customs Service TWI (up 6.1 percent) on import prices was greater than the downward influence on export prices from the Reserve Bank TWI (up 4.6 percent). 

 

Updates to previously published material

The overseas merchandise trade indexes are provisional for one quarter to allow for receipt and editing of late and amended trade documentation.

 

For the September 2009 quarter, the final merchandise export price index number was 3 index points lower than the provisional index number. This was mainly due to the inclusion of more up-to-date merchandise trade source data for dairy products and wool. 

 

For technical information contact:
Stephanie Ye or Dylan Xu
Wellington 04 931 4600
Email: info@stats.govt.nz  

Next release ...

Overseas Trade Indexes (Prices): March 2010 quarter (provisional)
and
Overseas Trade Indexes (Volumes): March 2010 quarter (provisional)
will both be released on 10 June 2010.