Overseas Trade Indexes (Prices): March 2010 quarter (provisional)

Merchandise

Terms of trade

The merchandise terms of trade rose 5.9 percent in the March 2010 quarter due to export prices (up 10.3 percent) rising more than import prices (up 4.2 percent). The latest quarterly increase is the largest since a 6.0 percent rise in the March 1976 quarter. 

The latest quarterly rise in the merchandise terms of trade means that in the March 2010 quarter, 5.9 percent more merchandise imports could be funded by a fixed quantity of merchandise exports than in the December 2009 quarter.

In the year to the March 2010 quarter, the merchandise terms of trade index fell 0.2 percent, following a 4.9 percent fall in the year to the March 2009 quarter and an 11.6 percent rise in the year to the March 2008 quarter.

Export prices

After four consecutive quarterly falls, merchandise export prices rose 10.3 percent in the March 2010 quarter. The latest quarterly rise followed falls of 0.3 percent and 5.4 percent in the December 2009 and September 2009 quarters, respectively. The latest quarterly rise is also the largest since a 10.6 percent increase in the September 2000 quarter, which was due to a lower New Zealand dollar and higher dairy prices. All of the export price indexes included in the ‘Tables’ section show an increase in the latest quarter.

The Reserve Bank trade weighted index (TWI) decreased slightly (down 0.3 percent) in the March 2010 quarter. Before the latest quarter, the New Zealand dollar had appreciated for three consecutive quarters, rising by a total of 22.0 percent from the March 2009 quarter to the December 2009 quarter. The appreciation of the New Zealand dollar during this period had a downward influence on export prices.

Dairy product prices (up 32.1 percent) made the most significant contribution to the overall rise in export prices in the March 2010 quarter. In comparison, dairy product prices rose 5.3 percent in the December 2009 quarter and fell 11.3 percent in the September 2009 quarter. The latest quarterly rise is the largest since the series began in the March 1950 quarter. An increase in world commodity prices was the main reason for the latest rise in dairy product prices, while the depreciation of the New Zealand dollar had only a minor impact. Price increases for milk powder (up 30.2 percent), butter (up 47.9 percent), and cheese (up 28.9 percent) contributed to the rise. Dairy product prices are still 6.4 percent lower than a year earlier and 25.0 percent lower than when they peaked in the December 2008 quarter.

Dairy product price rises also affected food and beverage prices, which rose 12.7 percent in the March 2010 quarter. The latest rise in food and beverage prices is the largest since a 13.9 percent increase in the December 1975 quarter, and follows no change in the December 2009 quarter and a 7.6 percent decrease in the September 2009 quarter. The latest quarterly rise was also influenced by higher prices for meat (up 3.5 percent). Lower prices for fruit and alcoholic beverages made significant downward contributions to food and beverage prices.

In the year to the March 2010 quarter, food and beverage prices fell 11.3 percent, compared with a 10.4 percent rise in the year to the March 2009 quarter.

 

Prices for non-food manufactured goods rose 6.2 percent in the March 2010 quarter. This rise follows decreases of 0.6 percent in the December 2009 quarter and 5.4 percent in the September 2009 quarter. Price increases for casein (up 22.9 percent) and aluminium (up 14.5 percent) contributed to the latest quarterly rise. In the year to the March 2010 quarter, prices for non-food manufactured goods fell 9.6 percent, compared with an increase of 6.5 percent in the year to the March 2009 quarter.

In the March 2010 quarter, forestry product prices rose 11.0 percent, following falls of 0.1 percent and 0.3 percent in the December 2009 and September 2009 quarters, respectively. Higher prices for wood and wood pulp were the main drivers of the latest quarterly rise. In the year to the March 2010 quarter, forestry product prices fell 3.6 percent, compared with an 18.5 percent rise in the year to the March 2009 quarter.

In the year to the March 2010 quarter, merchandise export prices fell 8.4 percent. The latest annual fall follows increases of 7.0 percent in the year to the March 2009 quarter and 12.5 percent in the year to the March 2008 quarter.

Import prices

Merchandise import prices rose 4.2 percent in the March 2010 quarter, compared with falls of 5.7 percent in the December 2009 quarter and 3.9 percent in the September 2009 quarter. According to exchange rates provided by the New Zealand Customs Service (NZCS) for valuing imports, the NZCS TWI of the New Zealand dollar fell 1.6 percent in the March 2010 quarter, following a 6.1 percent rise in the December 2009 quarter.

Prices for petroleum and petroleum products made a significant upward contribution to total import prices. Prices for electrical machinery and apparatus and for transport equipment also contributed to the latest rise.

In the March 2010 quarter, prices for petroleum and petroleum products rose 9.6 percent, following a 4.2 percent fall in the December 2009 quarter and a 17.4 percent rise in the September 2009 quarter. Higher prices for crude oil and for motor spirit made significant contributions to prices for petroleum and petroleum products.

In the year to the March 2010 quarter, petroleum and petroleum product prices rose 22.1 percent, following a 28.6 percent fall in the year to the March 2009 quarter and a 31.8 percent rise in the year to the March 2008 quarter.

Excluding petroleum and petroleum products, import prices rose 3.0 percent in the March 2010 quarter.

Prices for electrical machinery and apparatus rose 5.0 percent in the March 2010 quarter, following falls of 10.0 percent in the December 2009 quarter and 3.7 percent in the September 2009 quarter.

In the year to the March 2010 quarter, prices for electrical machinery and apparatus fell 13.4 percent. This annual fall follows a 22.1 percent rise and a 10.8 percent fall in the years to the March 2009 and March 2008 quarters, respectively.

 

Transport equipment prices rose 2.3 percent in the March 2010 quarter. The increase follows falls of 3.4 percent in the December 2009 quarter and 4.8 percent in the September 2009 quarter. Higher prices for new cars 1501–3000cc and new cars 3001cc and over contributed to the latest rise in transport equipment prices. Prices for used cars (1501–3000cc), which fell, had an offsetting effect on transport equipment prices.

Transport equipment prices fell 8.8 percent in the year to the March 2010 quarter; the largest annual fall since the June 2003 quarter. The latest annual fall follows a 19.6 percent increase in the year to the March 2009 quarter and a 2.9 percent fall in the year to the March 2008 quarter.

Merchandise import prices fell 8.3 percent in the year to the March 2010 quarter. This decrease follows rises of 12.6 percent in the year to the March 2009 quarter and 0.8 percent in the year to the March 2008 quarter.

Imports by broad economic category

All three broad economic categories showed price increases in the March 2010 quarter. Intermediate goods prices (up 6.1 percent) made the most significant contribution to total import prices. Prices for capital goods and consumption goods also made significant contributions to the overall increase in import prices.

 

In the March 2010 quarter, intermediate goods prices rose 6.1 percent, compared with falls of 5.2 percent and 2.6 percent in the December 2009 and the September 2009 quarters, respectively. Processed industrial supplies (up 5.1 percent) and primary fuels and lubricants (up 9.2 percent) contributed to the latest quarterly rise.

Prices for capital goods rose 2.9 percent in the March 2010 quarter. This increase follows falls of 8.5 percent and 7.2 percent in the December 2009 and the September 2009 quarters, respectively. Prices for non-transport capital equipment increased 3.0 percent, including price increases for computer equipment and for medical, surgical, or dental instruments.

Consumption goods prices showed an increase of 1.2 percent in the March 2010 quarter, compared with falls of 5.0 percent in the December 2009 quarter and 6.5 percent in the September 2009 quarter. Semi-durable goods prices (up 4.3 percent) made the most significant upward contribution to consumption goods prices, including price increases for footwear.

Services

Terms of trade

The terms of trade for services fell 0.9 percent in the March 2010 quarter, following rises of 0.8 percent and 9.8 percent in the December 2009 and September 2009 quarters, respectively. The latest quarterly fall was due to services import prices (up 3.1 percent) rising more than services export prices (up 2.2 percent).

In the year to the March 2010 quarter, the terms of trade for services rose 13.9 percent, compared with a 16.0 percent fall in the year to the March 2009 quarter and a 7.2 percent rise in the year to the March 2008 quarter.

Export prices

Services export prices rose 2.2 percent in the March 2010 quarter, following falls of 1.0 percent and 1.5 percent in the December 2009 and the September 2009 quarters, respectively. The latest quarterly rise in services export prices reflected increases in the transportation index (up 6.0 percent) and the other services index (up 1.2 percent, reflecting an increase in the personal, cultural, and recreational services sub-index).

In the year to the March 2010 quarter, services export prices fell 3.7 percent, compared with rises of 7.7 percent and 4.3 percent in the year to the March 2009 and March 2008 quarters, respectively.

Import prices

Services import prices rose 3.1 percent in the March 2010 quarter, following falls of 1.8 percent in the December 2009 quarter and 10.3 percent in the September 2009 quarter. The main contribution to the overall rise in services import prices came from the travel index (up 3.7 percent, with the personal travel sub-index being the main contributor) and the other services index (up 2.8 percent).

In the year to the March 2010 quarter, services import prices fell 15.5 percent, compared with a 28.3 percent rise in the year to the March 2009 quarter and a 2.7 percent fall in the year to the March 2008 quarter.

Exchange rate movements

According to the exchange rates published by the Reserve Bank of New Zealand, the TWI of the New Zealand dollar fell 0.3 percent in the March 2010 quarter, following a 4.6 percent rise in the December 2009 quarter. In the latest quarter, the New Zealand dollar depreciated against three of our five major trading partners’ currencies, excluding the Euro (up 3.9 percent) and the British pound (up 1.9 percent). The greatest depreciation was against the United States dollar (down 2.6 percent), followed by the Australian dollar (down 2.0 percent), and the Japanese yen (down 1.5 percent).

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 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 the Reserve Bank publishes.

For the March 2010 quarter, the NZCS TWI fell 1.6 percent, with the New Zealand dollar falling against three of our five major trading partners’ currencies.

A depreciation of the New Zealand dollar has an upward influence on both import and export prices in New Zealand dollars. The impact on the terms of trade depends on the relative mix of exports and imports for each currency.

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 technical information contact:
Selena Eaqub or Dylan Xu
Wellington 04 931 4600
Email: info@stats.govt.nz  

Next release ...

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