Trade Data Point To Strong Economic Activity And Further Rate Hikes

The NZ trade deficit for October widened to NZ$2129mn after an upwardly revised –NZ$1696mn in September. While both exports and imports rose strongly, import growth was far higher. These series are nominal and both volumes and prices boosted the data.

• Elevated export and import growth point to robust activity in both the domestic and foreign sectors of the economy. Thus, the RBNZ is likely to remain hawkish even after this week’s expected 75bp hike.
• Exports rose 14.1% y/y driven by dairy products again, which rose 34% driven by a 25% increase in milk powder prices and a +30% increase in milk fats volumes and prices.
• Exports to China fell 0.9% driven by a 10% fall in dairy products. But exports to Australia rose 22%, to the US 16% and to the EU 20%, all led by dairy.
• Imports rose 24.1% y/y driven by a surge in electric vehicles, especially from China. Fuel imports rose strongly, both in volume and price terms. Diesel volumes rose 106% and prices 121% and petrol 88% and 70% respectively. There was also a strong rise in imports of IT-related items.
• The trade deficit for the year to October widened to NZ$12.9bn from NZ$4.9bn the same time last year.

Source: MNI - Market News/Refinitiv