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

Terms of trade

The merchandise terms of trade fell 9.0 percent in the June 2009 quarter due to export prices (down 11.6 percent) decreasing more than import prices (down 2.9 percent). The terms of trade index is at its lowest level since the September 2006 quarter. The June 2009 quarter fall follows a 2.7 percent fall in the March 2009 quarter. The latest fall is the fifth consecutive quarterly fall, and also the largest for the merchandise terms of trade since a fall of 14.1 percent in the March 1975 quarter.

The latest quarterly fall in the merchandise terms of trade means that in the June 2009 quarter, 9.0 percent less merchandise imports could be funded by a fixed quantity of merchandise exports than in the March 2009 quarter.

In the year to the June 2009 quarter, the merchandise terms of trade fell 13.1 percent compared with rises of 10.7 percent and 2.3 percent in the years to the June 2008 and 2007 quarters, respectively. The latest annual fall is the largest since a 15.3 percent fall in the year to the June 1980 quarter.

The terms of trade for services rose 3.8 percent in the June 2009 quarter following four consecutive quarterly falls, including a 2.3 percent fall in the March 2009 quarter. The increase in the latest quarter was due to services export prices (down 3.3 percent) decreasing less than import prices (down 6.9 percent). In the year to the June 2009 quarter, the terms of trade for services fell 9.7 percent compared with rises of 1.3 percent in the year to the June 2008 quarter and 10.3 percent in the year to the June 2007 quarter.

Merchandise export prices

The merchandise export price index fell 11.6 percent in the June 2009 quarter, following a 7.9 percent fall in the March 2009 quarter and a 2.5 percent rise in the December 2008 quarter. The fall in the latest quarter is the largest since a 40.0 percent fall in the June 1951 quarter which was influenced by a large price decrease for wool. All of the export price indexes in the Hot Off The Press tables fell in the June 2009 quarter. The appreciation of the New Zealand dollar had a downward influence on export prices in the latest quarter. The Reserve Bank's trade weighted index (TWI) showed a rise of 8.7 percent in the June 2009 quarter, which was the largest since a 9.6 percent rise in the September 1985 quarter.

The food and beverages index (down 14.8 percent) made the most significant contribution to the decrease in total export prices in the June 2009 quarter. The latest quarterly fall is the largest since the series began in the September 1971 quarter, and follows an 8.1 percent fall in the March 2009 quarter and a 6.5 percent rise in the December 2008 quarter. The decrease in prices of dairy products (down 24.1 percent) and meat (down 7.0 percent) were the main contributors to the latest fall in the food and beverages index. In the year to the June 2009 quarter, the food and beverages index fell 9.5 percent compared with an increase of 28.3 percent in the year to the June 2008 quarter. The latest annual fall is the largest since a 13.3 percent fall in the year to the June 2003 quarter.

The dairy products index fell 24.1 percent in the June 2009 quarter, which is the largest quarterly fall since the series began in the March 1950 quarter. The latest fall brings the dairy products index to its lowest level since the June 2007 quarter. The latest decrease compares with a 19.9 percent decrease in the March 2009 quarter and a 5.5 percent increase in the December 2008 quarter. The June 2009 quarter fall was driven by price decreases for milk powder (down 22.8 percent), cheese (down 23.7 percent), and butter (down 25.7 percent). In the year to the June 2009 quarter, the dairy products index fell 31.1 percent compared with a 57.5 percent rise in the year to the June 2008 quarter. The latest annual fall is the largest since a 31.6 percent fall in the year to the March 2003 quarter.

Another significant contributor to the decrease in the total exports index was the non-food manufactured goods index (down 9.4 percent). This fall is the largest since a decrease of 11.0 percent in the June 1995 quarter, and follows a 4.9 percent decrease in the March 2009 quarter and a 2.4 percent increase in the December 2008 quarter. Price falls for aluminium (down 15.4 percent) and casein (down 29.5 percent) contributed to this decrease. In the year to the June 2009 quarter, the non-food manufactured goods index fell 5.8 percent compared with a rise of 7.0 percent in the year to the June 2008 quarter.

In the June 2009 quarter, the forestry products index fell 9.4 percent, which is the largest quarterly fall since a decrease of 12.2 percent in the December 1993 quarter. The latest fall follows a 0.2 percent decrease and an 11.0 percent increase in the March 2009 and December 2008 quarters, respectively. Lower prices of pinus radiata sawn timber and kraft linerboard were the main drivers of the latest quarterly fall. In the year to the June 2009 quarter, the forestry products index rose 5.1 percent, compared with a 1.1 percent fall in the year to the June 2008 quarter.

In the year to the June 2009 quarter, the merchandise export price index fell 9.4 percent, the largest fall since a 9.5 percent decrease in the year to the September 2003 quarter. The latest annual fall follows a rise of 19.0 percent in the year to the June 2008 quarter and a 5.8 percent fall in the year to the June 2007 quarter.

Merchandise import prices

In the June 2009 quarter, the merchandise import price index fell 2.9 percent, following a fall of 5.4 percent in the March 2009 quarter and a rise of 3.5 percent in the December 2008 quarter. The fall in import prices was partly due to the appreciation of the New Zealand dollar against four of the five major trading partners. (According to exchange rates provided by the New Zealand Customs Service for valuing imports, the trade weighted index of the New Zealand dollar rose 4.5 percent in the June 2009 quarter). Import indexes fell across the board in the June 2009 quarter, with the exception of the non-fuel crude materials index (up 21.9 percent) and the food and beverages index (up 3.7 percent).

Falls in the chemicals and related products index, the mechanical machinery index and the electrical machinery and apparatus index were the major contributors to the overall fall in import prices in the June 2009 quarter.

In the June 2009 quarter, the chemicals and related products index made a major contribution to the overall fall in import prices, with a fall of 7.9 percent following a 3.6 percent decrease in the March 2009 quarter and a 5.1 percent increase in the December 2008 quarter. The latest quarterly fall is the largest since an 8.3 percent decrease in the March 2001 quarter. The latest fall was influenced by large volumes of potassium chloride at relatively high prices in the March 2009 quarter. In the year to the June 2009 quarter, the chemicals and related products index rose 2.9 percent, following a rise of 7.9 percent in the year to the June 2008 quarter, and a fall of 4.4 percent in the year to the June 2007 quarter.

Another large contributor to the fall in total import prices was the mechanical machinery index, which fell 5.1 percent in the June 2009 quarter. This compares with increases of 8.2 percent in the March 2009 quarter, 18.1 percent in the December 2008 quarter, and 5.9 percent in the September 2008 quarter. Lower prices for computers and machinery parts and accessories pushed this index down in the June 2009 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 June 2009 quarter had an impact on the decrease in computer prices). In the year to the June 2009 quarter, the mechanical machinery index rose 28.5 percent compared with falls of 10.5 percent in the year to the June 2008 quarter, and 16.2 percent in the year to the June 2007 quarter. 

Another significant contributor to the fall in total import prices in the June 2009 quarter came from the electrical machinery and apparatus index (down 4.8 percent). This compares with increases of 9.1 percent and 7.8 percent in the March 2009 and December 2008 quarters, respectively. In the year to the June 2009 quarter, the electrical machinery and apparatus index rose 15.6 percent, compared with decreases of 7.7 percent in the year to the June 2008 quarter, and 8.9 percent in the year to the June 2007 quarter.

The non-fuel crude materials index rose 21.9 percent, making a significant upward contribution to the overall fall in import prices in the June 2009 quarter. This increase compares with a 39.1 percent decrease in the March 2009 quarter and a 14.5 percent increase in the December 2008 quarter. The fall in the March 2009 quarter and the rise in the June 2009 quarter were influenced by changes in the pattern of crude fertiliser imports. There were no imports of calcium phosphate in the March 2009 quarter and no imports of sulphur in the June 2009 quarter. Sulphur prices in the March 2009 quarter were relatively low, whereas calcium phosphate prices in the June 2009 quarter were relatively high. In the year to the June 2009 quarter, the non-fuel crude materials index rose 10.9 percent, following an increase of 37.5 percent in the year to the June 2008 quarter, and a decrease of 4.2 percent in the year to the June 2007 quarter.

The total import price index rose 4.3 percent in the year to the June 2009 quarter. This follows a 7.5 percent rise in the year to the June 2008 quarter, and a 7.9 percent fall in the year to the June 2007 quarter.

All three broad economic categories showed price falls in the June 2009 quarter. The intermediate goods index (down 2.7 percent) was a significant contributor to the 2.9 percent fall in the total import price index. The capital goods index and consumption goods index also made significant contributions to the overall fall in import prices.

In the June 2009 quarter, the intermediate goods index fell 2.7 percent, following decreases of 14.4 percent and 0.9 percent in the March 2009 and December 2008 quarters, respectively. The latest fall in the index primarily came from the processed industrial supplies subgroup (down 6.3 percent), which was mainly driven by price falls for aluminium oxide, chemical preparations, and glass. The primary industrial supplies sub-index (up 81.6 percent after a 62.1 percent fall in the March 2009 quarter) contributed the largest offsetting increase. The March 2009 and June 2009 quarter movements were influenced by changes in the pattern of crude fertiliser imports (detailed above).

The capital goods index showed a fall of 5.2 percent in the June 2009 quarter, compared with rises of 8.8 percent in the March 2009 quarter, and 13.2 percent in the December 2008 quarter. The latest fall is the largest since a 5.8 percent fall in the December 2004 quarter. A 6.1 percent fall in the latest quarter for the non-transport equipment sub-index was the major driver of the fall in the capital goods index. Items in this subgroup that fell in price included computers and computer accessories (such as storage devices).

The consumption goods index fell 4.1 percent in the June 2009 quarter compared with four consecutive rises in previous quarters. Four of the five published sub-indexes had price falls in the latest quarter, except for a small rise in the processed food and beverages sub-index (up 0.3 percent). A 6.9 percent fall in the semi-durable consumption goods sub-index drove the movement in the consumption goods index. Price falls within this subgroup included clothing and footwear items. ---PDF BREAK---

Services export prices

In the June 2009 quarter, services export prices fell 3.3 percent, which is the first quarterly fall since a 0.3 percent decrease in the June 2007 quarter. The latest quarterly fall follows rises of 0.5 percent in the March 2009 quarter, and 3.1 percent in the December 2008 quarter. In the latest quarter, the transportation index (down 10.4 percent) made the largest contribution to the overall fall in services export prices.

In the year to the June 2009 quarter, the services export price index rose 2.8 percent, following a 6.0 percent increase in the year to the June 2008 quarter.

Services import prices

Services import prices fell 6.9 percent in the June 2009 quarter, compared with increases of 2.9 percent in the March 2009 quarter and 10.2 percent in the December 2008 quarter. The latest quarterly decrease is the largest recorded since the series began in the June 1997 quarter. All the published services import indexes showed decreases in the June 2009 quarter. The contributions to the latest overall fall in services import prices primarily came from the transportation index (down 8.2 percent) and the travel index (down 6.9 percent). The decrease in the transportation index was driven by the sea freight sub-index, and the personal travel sub-index was the main reason for the fall in the travel index.

In the year to the June 2009 quarter, the services import price index rose 13.9 percent, following a rise of 4.6 percent in the year to the June 2008 quarter and a fall of 8.6 percent in the year to the June 2007 quarter.

Exchange rate movements

According to the exchange rates published by the Reserve Bank of New Zealand, the trade weighted index (TWI) of the New Zealand dollar rose 8.7 percent in the June 2009 quarter. In this quarter, the New Zealand dollar appreciated against four of the five currencies of the major trading partners, excluding the Australian dollar (down 1.1 percent). The greatest appreciation was against the Japanese yen (up 17.7 percent), followed by a 13.1 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.

In the June 2009 quarter, the NZCS TWI recorded a rise of 4.5 percent, with the New Zealand dollar rising against four of the five currencies of our major trading partners, except the Australian dollar.

The appreciation of the New Zealand dollar has a downward influence on both import and export prices in New Zealand dollars. In the June 2009 quarter, the influence of the Reserve Bank TWI (up 8.7 percent) on export prices was greater than the influence on import prices from the Customs Service TWI (up 4.5 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 technical information contact:
Stephanie Ye or Dylan Xu
Wellington 04 931 4600
Email: info@stats.govt.nz  

Next release ...

Overseas Trade Indexes (Prices): September 2009 quarter (provisional)
and
Overseas Trade Indexes (Volumes): September 2009 quarter (provisional)
will both be released on 10 December 2009.