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

Terms of trade

Merchandise export prices (down 8.2 percent) decreased more than import prices (down 5.4 percent) causing the merchandise terms of trade to fall 3.0 percent in the March 2009 quarter. This fall in the terms of trade follows a 1.0 percent decrease in the December 2008 quarter, and is the largest since a fall of 4.7 percent in the June 2002 quarter. In the year to the March 2009 quarter, the merchandise terms of trade fell 5.2 percent compared with rises of 11.6 percent and 4.5 percent in the years to the March 2008 and 2007 quarters, respectively.

The latest fall in the merchandise terms of trade means that in the March 2009 quarter, 3.0 percent less merchandise imports could be funded by a fixed quantity of merchandise exports than in the December 2008 quarter.

In the March 2009 quarter, the terms of trade for services fell 2.3 percent, its fourth consecutive quarterly decrease, following a 6.5 percent fall in the December 2008 quarter. The latest fall in the terms of trade for services was a result of services import prices (up 2.9 percent) increasing more than export prices (up 0.5 percent). In the year to the March 2009 quarter, the terms of trade for services fell 16.0 percent compared with rises of 7.2 percent in the year to the March 2008 quarter and 3.3 percent in the year to the March 2007 quarter. The latest annual decrease is the largest since the series began in the June 1997 quarter. 

Merchandise export prices

The merchandise export price index fell 8.2 percent in the March 2009 quarter compared with increases of 2.5 percent in the December 2008 quarter and 8.6 percent in the September 2008 quarter. The fall in the latest quarter is the largest since a 9.1 percent decrease in the December 1957 quarter. All published export price indexes had decreases in the March 2009 quarter, except for the fish and fish preparations index and the meat index. The latest quarterly fall in merchandise export prices was mainly driven by lower prices for food and beverages, particularly dairy products, and for petroleum and petroleum products.

In the March 2009 quarter, the food and beverages index (down 8.4 percent) was the most significant contributor to the overall decrease in merchandise export prices. This quarterly fall is the first for the food and beverages index since a 0.3 percent decrease in the June 2007 quarter and follows increases of 6.5 percent and 8.4 percent in the December 2008 and September 2008 quarters, respectively. The latest fall in the food and beverages index primarily came from a 20.5 percent decrease in prices for dairy products. Despite the quarterly fall, the food and beverages index rose 10.1 percent in the year to the March 2009 quarter, following a 23.0 percent rise in the year to the March 2008 quarter.

The dairy products index fell 20.5 percent in the March 2009 quarter, the largest quarterly decrease since the series began in the March 1950 quarter. The latest quarterly decrease compares with increases of 5.5 percent in the December 2008 quarter and 7.4 percent in the September 2008 quarter. This quarter's fall was driven by price decreases for whole milk powder (down 20.1 percent), skimmed milk powder (down 24.1 percent), cheese (down 19.9 percent), and butter (down 30.3 percent). In the year to the March 2009 quarter, the dairy products index fell 10.0 percent compared with a rise of 63.3 percent in the year to the March 2008 quarter. The latest annual decrease is the largest since a 13.9 percent decrease in the year to the June 2003 quarter.

Following dairy products, the other main contributor to the fall in the merchandise export price index came from a 28.0 percent fall in the petroleum and petroleum products index. This fall follows a decrease of 31.6 percent in the December 2008 quarter and an increase of 8.5 percent in the September 2008 quarter. The latest quarterly fall was influenced by lower export prices for crude oil. In the year to the March 2009 quarter, the petroleum and petroleum products index fell 31.2 percent, which is the largest annual fall since a 38.0 percent decrease in the year to the December 2001 quarter. The latest annual decrease compares with an increase of 30.7 percent in the year to the March 2008 quarter. 

 

The fish and fish preparations index (up 5.6 percent) partly offset falls in merchandise export prices for the March 2009 quarter. This rise follows increases of 10.7 percent and 10.6 percent in the December 2008 and September 2008 quarters, respectively. Price increases were recorded for most fish exports, including rock lobster (up 18.1 percent) and frozen hoki fillets (up 3.4 percent). In the year to the March 2009 quarter, the fish and fish preparations index increased 34.3 percent. This annual rise is the largest since an increase of 44.2 percent in the year to the June 1985 quarter, and follows a 6.7 percent rise in the year to the March 2008 quarter and a 4.5 percent fall in the year to the March 2007 quarter.

In the year to the March 2009 quarter, the merchandise export price index rose 6.7 percent. This follows rises of 12.5 percent in the year to the March 2008 quarter and 4.8 percent in the year to the March 2007 quarter.

Merchandise import prices

The merchandise import price index fell 5.4 percent in the March 2009 quarter, following rises of 3.5 percent in the December 2008 quarter and 9.6 percent in the September 2008 quarter. The latest quarterly fall is the first since the September 2007 quarter, even though the New Zealand dollar depreciated, which has an upward influence on prices. The decrease was mainly driven by lower prices for petroleum and petroleum products, which was partly offset by price increases for machinery and for transport equipment.

Petroleum and petroleum products made the most significant contribution to the latest quarterly decrease in import prices with a fall of 35.8 percent. This follows a fall of 22.2 percent in the December 2008 quarter and an increase of 21.0 percent in the September 2008 quarter. The latest quarterly fall was the largest for this index since the series began in the March 1971 quarter. The decrease was largely driven by lower prices for crude oil (down 36.3 percent). The fall in prices of automotive diesel, petrol, and kerosene-type jet fuel also made significant contributions to this index. In the year to the March 2009 quarter, the petroleum and petroleum products index declined 28.9 percent compared with a 31.8 percent rise in the year to the March 2008 quarter and a 1.2 percent fall in the year to the March 2007 quarter.

When petroleum and petroleum products are excluded, the total import price index increased 2.8 percent in the March 2009 quarter.

Non-fuel crude materials contributed significantly to the fall in import prices in the March 2009 quarter with a decrease of 39.1 percent. This quarterly decrease is the largest recorded for this index since the series began in the September 1971 quarter. The decrease follows rises of 14.5 percent in the December 2008 quarter and 30.5 percent in the September 2008 quarter. Lower prices for aluminium oxide, sulphur, and vegetable oils contributed to the decrease. In the year to the March 2009 quarter, the non-fuel crude materials index rose 14.3 percent compared with rises of 9.3 percent in the year to the March 2008 quarter and 8.0 percent in the year to the March 2007 quarter. 

The mechanical machinery index rose 8.2 percent in the March 2009 quarter following increases of 18.1 percent in the December 2008 quarter and 5.9 percent in the September 2008 quarter. Price rises for computers, machinery parts, and excavators contributed to this increase. (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 depreciation of the New Zealand dollar against the United States dollar in the March 2009 quarter had an impact on the increase in computer prices.) In the year to the March 2009 quarter, the mechanical machinery index rose 34.1 percent compared with falls of 14.1 percent in the year to the March 2008 quarter and 5.9 percent in the year to the March 2007 quarter. The latest annual increase is also the largest for this index since a 38.1 percent increase in the year to the December 1975 quarter.

The transport equipment index rose 7.9 percent in the March 2009 quarter. This follows rises of 9.0 percent in the December 2008 quarter and 2.8 percent in the September 2008 quarter. Price rises for road vehicles contributed to this increase. In the year to the March 2009 quarter the transport equipment index rose 20.8 percent compared with falls of 2.9 percent in the year to the March 2008 quarter and 0.7 percent in the year to the March 2007 quarter. The latest annual rise is the largest for this index since a 22.7 percent rise in the year to the June 1992 quarter.

In the year to the March 2009 quarter, the total import price index rose 12.6 percent compared with rises of 0.8 percent in the year to the March 2008 quarter and 0.3 percent in the year to the March 2007 quarter.

 
In the March 2009 quarter, the intermediate goods index made the largest contribution to the overall 5.4 percent fall in import prices. The capital goods index and the consumption goods index showed price rises.

The intermediate goods index fell 14.5 percent in the March 2009 quarter, following a 0.9 percent fall in the December 2008 quarter and a 14.5 percent rise in the September 2008 quarter. The largest contribution to the latest decrease came from the primary fuels and lubricants sub-index, which fell 35.9 percent. This fall was mainly driven by lower crude oil prices (down 36.3 percent). The processed fuels and lubricants sub-index (down 29.6 percent) also made a significant contribution to the decrease in the intermediate goods index. Price falls were recorded for automotive diesel and kerosene jet fuel.

The capital goods index rose 8.9 percent in the March 2009 quarter, following rises of 13.2 percent and 4.7 percent in the December 2008 and September 2008 quarters, respectively. The main contribution to the latest increase came from the non-transport equipment sub-index (up 8.9 percent), which was mainly driven up by the prices of excavators.

A 7.9 percent rise for the consumption goods index in the March 2009 quarter follows a 6.8 percent rise in the December 2008 quarter and a 7.0 percent rise in the September 2008 quarter. The major drivers of this rise were the semi-durable and non-durable consumer goods sub-indexes (up 11.2 percent and 6.8 percent respectively).

Services export prices

In the March 2009 quarter, services export prices rose 0.5 percent, which was the seventh rise since a fall of 0.3 percent in the June 2007 quarter. The latest increase follows rises of 3.1 percent and 2.6 percent in the December 2008 and September 2008 quarters, respectively. In the March 2009 quarter, the overall rise was primarily driven by the travel index (up 1.2 percent), which was partly offset by a 2.2 percent fall in transportation. Higher education charges in the personal travel sub-index was the main driver of the increase in the travel index, while the overall fall in the transportation index was driven by decreases in prices for air transport.

In the year to the March 2009 quarter, the services export price index increased 7.7 percent following increases of 4.3 percent in the year to the March 2008 quarter and 4.0 percent in the year to the March 2007 quarter.

Services import prices

Services import prices increased 2.9 percent in the March 2009 quarter following rises of 10.2 percent in the December 2008 quarter and 7.9 percent in the September 2008 quarter. Three of the four published services import indexes rose in the latest quarter. The largest contribution to the overall increase came from the travel index (up 6.6 percent). The rise in the travel index was mainly driven by the personal travel sub-index (due to increases in costs for accommodation and meals abroad, and the depreciation of the New Zealand dollar).

In the year to the March 2009 quarter, the services import price index rose 28.3 percent. This compares with a fall of 2.7 percent in the year to the March 2008 quarter and a rise of 0.6 percent in the year of the March 2007 quarter, and is the largest annual rise 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, the trade weighted index (TWI) of the New Zealand dollar fell 7.1 percent in the March 2009 quarter. In this quarter, the New Zealand dollar depreciated against all five currencies of the major trading partners excluding the UK pound (up 1.0 percent). The greatest depreciation was against the Japanese yen (down 10.9 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 Services (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. 

The NZCS TWI recorded a fall of 8.1 percent for the March 2009 quarter, with the New Zealand dollar falling against four of the five currencies of our major trading partners, except the UK pound. The 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:
Stephanie Ye or Dylan Xu
Wellington 04 931 4600
Email: info@stats.govt.nz  

Next release ...

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