Overseas Trade Indexes (Prices): September 2008 quarter (provisional)

Terms of trade

The merchandise terms of trade fell 2.3 percent in the September 2008 quarter due to import prices (up 11.1 percent) rising more than export prices (up 8.6 percent). This latest fall followed a 0.4 percent fall in the June 2008 quarter, which was preceded by six consecutive quarterly rises. On an annual basis, the merchandise terms of trade rose 4.4 percent in the year to the September 2008 quarter, and is now 20.9 percent higher than it was five years ago in the September 2003 quarter.

The quarterly decrease in the merchandise terms of trade means that in the September 2008 quarter, 2.3 percent less merchandise imports could be funded by a fixed quantity of merchandise exports than in the June 2008 quarter.

The terms of trade for services fell 4.9 percent in the September 2008 quarter, following a 3.4 percent fall in the June 2008 quarter, and a 2.2 percent rise in the March 2008 quarter. The fall in the latest quarter resulted from services import prices (up 7.9 percent) rising more than export prices (up 2.6 percent). In the year to the September 2008 quarter, the services terms of trade fell 3.6 percent, compared with a 10.8 percent rise in the year to the September 2007 quarter, and a 5.8 percent fall in the year to the September 2006 quarter.

Merchandise export prices

The merchandise export price index rose 8.6 percent in the September 2008 quarter, following rises of 4.5 percent in both the June 2008 and March 2008 quarters. This latest rise is the largest increase since a 9.9 percent rise in the June 2006 quarter. All of the published export price indexes rose in the latest quarter. The Reserve Bank Trade Weighted Index (TWI) showed a fall of 5.4 percent for the September 2008 quarter. This depreciation of the New Zealand dollar made a significant contribution to the increase in total export prices this quarter.

Food and beverages (up 8.4 percent) made the largest contribution to the rise in the total exports index. This latest rise follows rises of 4.0 percent in the June 2008 quarter and 6.7 percent in the March 2008 quarter. The sub-groups making the largest contributions were dairy products (up 7.4 percent) and meat (up 11.5 percent). In the year to the September 2008 quarter, the food and beverages index rose 30.0 percent, which is the largest annual increase since the series began in the September 1971 quarter.

The dairy products index rose 7.4 percent in the September 2008 quarter, following a 0.2 percent fall in the June 2008 quarter, and three relatively large rises in the March 2008, December 2007, and September 2007 quarters. Rises within the dairy products index included milk and cream (liquid or powder) (up 6.7 percent), butter (up 10.5 percent), and cheese (up 6.9 percent). In the year to the September 2008 quarter, the dairy products index rose 44.7 percent, compared with smaller rises of 16.6 percent in the year to the September 2007 quarter, and 2.5 percent in the year to the September 2006 quarter.

The meat index rose 11.5 percent in the September 2008 quarter, following an 8.2 percent rise in the June 2008 quarter and a 0.3 percent fall in the March 2008 quarter. The latest rise is the largest since a 15.4 percent rise in the September 1984 quarter. Driving up the meat index was beef and veal (up 16.5 percent), followed by lamb, hogget and mutton (up 10.0 percent). In the year to the September 2008 quarter, the meat index rose 23.5 percent, compared with a fall of 9.8 percent in the year to the September 2007 quarter and a rise of 1.9 percent in the year to the September 2006 quarter. The latest annual movement is the largest since a 25.3 percent rise in the year to the September 1989 quarter. 
 

Non-food manufactured goods (up 6.7 percent) also made a significant contribution to the rise in the total exports index. This latest rise followed rises of 2.4 percent in the June 2008 quarter and 1.4 percent in the March 2008 quarter. Driving up this index were rises for iron and steel (up 23.5 percent) and aluminium (up 10.0 percent). In the year to the September 2008 quarter, the non-food manufactured goods index rose 14.1 percent, compared with a 6.3 percent fall in the year to the September 2007 quarter, and a 13.8 percent rise in the year to the September 2006 quarter.

On an annual basis, the merchandise export price index rose 25.0 percent in the year to the September 2008 quarter, the largest increase since a 27.2 percent rise in the year to the December 2000 quarter. The latest annual increase followed a 1.9 percent fall in the year to the September 2007 quarter, and a 10.2 percent rise in the year to the September 2006 quarter.

Merchandise import prices

The merchandise import price index rose 11.1 percent in the September 2008 quarter, following rises of 4.9 percent in the June 2008 quarter and 0.3 percent in the March 2008 quarter. This was the largest quarterly increase for merchandise imports since the 16.3 percent rise in the September 1984 quarter. The rise in the import price index in the latest quarter was partly driven by higher prices for petroleum and petroleum products. The depreciation of the New Zealand dollar made a significant contribution to the increase in total import prices this quarter.

The petroleum and petroleum products index rose 31.0 percent in the September 2008 quarter, the largest increase since a 66.3 percent increase in the December 1990 quarter. The latest quarterly increase follows a 17.8 percent increase in the June 2008 quarter and an 8.3 percent increase in the March 2008 quarter. The index was driven up by higher prices for crude oil (up 38.4 percent), along with significant rises for automotive diesel, petrol and kerosene-type jet fuel. In the year to the September 2008 quarter, the petroleum and petroleum products index rose 79.9 percent, compared with an 11.5 percent fall in the year to the September 2007 quarter and a 39.5 percent rise in the year to the September 2006 quarter. 

When petroleum and petroleum products are excluded from the total imports index, the movement in the September 2008 quarter is a rise of 7.4 percent.

Another significant contributor to the rise in the imports prices was the fertilisers – crude and manufactured index, which rose by 67.0 percent in the September 2008 quarter. This rise is the largest quarterly increase for this index since the series began in the September 1982 quarter, and follows rises of 20.2 percent in the June 2008 quarter and 22.2 percent in the March 2008 quarter. Price rises were recorded for natural calcium phosphate (up 125.2 percent), urea, and potassium chloride. In the year to the September 2008 quarter the fertilisers – crude and manufactured index rose 164.9 percent, compared with a 3.9 percent fall in the year to the September 2007 quarter, and an 18.0 percent rise in the year to the September 2006 quarter. This latest annual rise was also the largest increase for this index since the series began in the September 1982 quarter. 

 

The mechanical machinery index rose 6.2 percent in the September 2008 quarter, following falls of 1.0 percent in the June 2008 quarter and 4.7 percent in the March 2008 quarter. The latest movement was the first quarterly increase for this index since the June 2006 quarter. Price rises for computers, machinery parts and air-conditioning machines contributed to this increase. In the year to the September 2008 quarter the mechanical machinery index fell 1.5 percent, compared with a fall of 17.1 percent in the year to the September 2007 quarter and a rise of 2.5 percent in the year to the September 2006 quarter.

The iron and steel index rose 26.4 percent in the September 2008 quarter, following rises of 7.3 percent in the June 2008 quarter and 0.9 percent in the March 2008 quarter. The current increase was the largest increase for the iron and steel index since the series began in the March 1971 quarter. In the year to the September 2008 quarter, the iron and steel index rose 35.8 percent, compared with a 0.5 percent fall in the year to the September 2007 quarter and a 13.0 percent rise in the year to the September 2006 quarter. It is the largest annual increase since the 47.3 percent increase in the year to the June 1989 quarter.

On an annual basis, the total imports price index rose 19.8 percent, compared with a 9.5 percent fall in the year to the September 2007 quarter, and an 11.7 percent rise in the year to the September 2006 quarter.

 

In the September 2008 quarter, all three of the main broad economic categories showed price rises. The only published broad economic category to fall was the passenger motor cars index, which fell by 1.9 percent. The intermediate goods index (up 18.1 percent) made the largest contribution to the overall 11.1 percent rise in total import prices this quarter.

The 18.1 percent rise for the intermediate goods index in the September 2008 quarter, follows rises of 9.8 percent in the June 2008 quarter and 2.5 percent in the March 2008 quarter. The largest contribution to this increase came from the primary fuels and lubricants subgroup, which rose 38.2 percent. This was mainly driven by crude oil prices. The primary industrial supplies subgroup, which includes natural calcium phosphate and sulphur, rose 69.6 percent. This was the largest quarterly rise since the series began in the September 1982 quarter.

The consumption goods index (up 6.9 percent), also contributed to the overall rise in total import prices. This rise followed a 1.9 percent rise in the June 2008 quarter, and a 1.2 percent fall in the March 2008 quarter. The major driver of the latest rise was from the semi-durable consumer goods sub-index (up 8.9 percent).

The capital goods index rose 5.1 percent in the September 2008 quarter, following falls of 0.6 percent and 2.5 percent in the June 2008 and March 2008 quarters, respectively. The main contribution came from the non-transport equipment sub-index (up 4.8 percent).

Services export prices

Services export prices rose 2.6 percent in the September 2008 quarter, following rises of 1.3 percent and 1.4 percent in the June 2008 and March 2008 quarters, respectively. All the published services export indexes rose in the latest quarter. The transportation index, up 7.8 percent, was the largest contributor to the increase in the export services index. The rise in the transportation index was mainly driven by the air transportation sub-index, due to higher fuel costs and the depreciated New Zealand dollar.

In the year to the September 2008 quarter, the services export price index rose 7.2 percent, the highest annual increase since the 10.2 percent rise in the December 2000 quarter. The latest increase compares with rises of 1.8 percent in the year to the September 2007 quarter and 4.7 percent in the year to the September 2006 quarter. 

Services import prices

Services import prices rose 7.9 percent in the September 2008 quarter, following a 4.9 percent rise in the June 2008 quarter and a 0.8 percent fall in March 2008 quarter. All the published services import indexes rose in the latest quarter. The transport index (up 12.0 percent) was the main contributor to the overall rise in services import prices. This rise was mostly driven by the sea-transportation sub-index.

In the year to the September 2008 quarter, the services import price index rose 11.3 percent. This compares with a fall of 8.2 percent in the year to the September 2007 quarter and a rise of 11.2 percent in the year to the September 2006 quarter.

Exchange rate movements

According to the exchange rates published by the Reserve Bank of New Zealand, in the trade weighted index (TWI) the New Zealand dollar fell 5.4 percent in the September 2008 quarter. In this quarter, the New Zealand dollar depreciated against all major trading partner currencies, but the greatest depreciation was against the United States dollar (down 8.0 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 New Zealand Customs Service (NZCS) each fortnight. These exchange rates are prepared 11 days prior to 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 September 2008 quarter, the NZCS TWI reported a 5.8 percent decrease, with the New Zealand dollar falling against all the five major currencies traded. Depreciation of the New Zealand dollar against key currencies 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:
Karla Gardiner or Litia Tapu
Wellington 04 931 4600
Email: info@stats.govt.nz

Next release ...

Overseas Trade Indexes (Prices): December 2008 quarter (provisional)
and
Overseas Trade Indexes (Volumes): December 2008 quarter (provisional)
will both be released on 11 March 2009.