Overseas Trade Indexes (Prices): September 2011 quarter (provisional)

Commentary

Terms of trade fall 0.7 percent

The merchandise terms of trade fell 0.7 percent in the September 2011 quarter due to export prices falling (down 4.0 percent) more than import prices (down 3.4 percent). This fall in the terms of trade follows seven consecutive rises, including 2.4 percent in the June 2011 quarter and 0.8 percent in the March 2011 quarter.

The fall in the September 2011 quarter means that compared with the June 2011 quarter, 0.7 percent less merchandise imports could be funded by a fixed quantity of merchandise exports. In the June 2011 quarter, the terms of trade was at the highest level since the March 1974 quarter.

In the year to the September 2011 quarter, the terms of trade increased 3.3 percent. This rise compares with an 18 percent increase in the year to the September 2010 quarter, and a 14 percent decrease in the year to the September 2009 quarter.

Export prices for goods fall 4.0 percent

Export prices for goods fell 4.0 percent in the September 2011 quarter. This fall follows rises of 1.9 percent in the June 2011 quarter and 6.3 percent in the March 2011 quarter.

The Reserve Bank's trade weighted index (TWI) rose 4.2 percent in the September 2011 quarter. A rising New Zealand dollar has a downward influence on export prices. The New Zealand dollar rose against four of our five major trading partners’ currencies and fell slightly against the Japanese yen.

The September 2011 quarter movement in export prices was influenced by:

  • dairy prices (down 4.8 percent)
  • forestry prices (down 9.1 percent)
  • meat prices (down 4.8 percent).

Export prices up for the year

In the year to the September 2011 quarter, export prices increased 4.5 percent, compared with a 14 percent increase in the year to the September 2010 quarter and a 21 percent decrease in the year to the September 2009 quarter.

Dairy prices fall 4.8 percent

Dairy prices (down 4.8 percent) made the most significant downward contribution to the change in export prices in the September 2011 quarter. This fall follows rises of 4.5 percent and 5.5 percent in the June 2011 and March 2011 quarters, respectively. Prices for milk powder (down 2.9 percent), butter (down 11 percent), and cheese (down 4.3 percent) were the main contributors to the latest fall.

In the year to the September 2011 quarter, dairy prices decreased 4.2 percent, compared with a 58 percent increase in the year to the September 2010 quarter and a 43 percent decrease in the year to the September 2009 quarter.

Graph, Dairy products export price index, annual change from same quarter of previous year, September 2006 to September 2011.

Forestry prices fall 9.1 percent

The second-most significant downward contribution came from forestry product prices, which fell 9.1 percent in the September 2011 quarter. The latest fall follows a 0.4 percent fall in the June 2011 quarter and a 4.4 percent rise in the March 2011 quarter. The fall in forestry product prices was influenced by wood (down 13 percent) and wood pulp (down 5.3 percent).

In the year to the September 2011 quarter, forestry product prices decreased 4.8 percent. The latest annual decrease compares with a 12 percent increase in the year to the September 2010 quarter and a 3.7 percent decrease in the year to the September 2009 quarter.

Graph, Forestry products export price index, annual change from same quarter of previous year, September 2006 to September 2011.

Meat prices fall 4.8 percent

Meat prices (down 4.8 percent) made the third-most significant downward contribution to the change in export prices in the September 2011 quarter. This fall compares with rises of 2.9 percent and 10 percent in the June 2011 and March 2011 quarters, respectively.

The fall in meat prices was influenced by:

  • beef and veal (down 8.8 percent)
  • lamb (down 3.3 percent).

In the year to the September 2011 quarter, meat prices increased 13 percent, compared with decreases of 0.4 percent in the year to the September 2010 quarter and 5.1 percent in the year to the September 2009 quarter.

Graph, Meat export index, annual change from same quarter of previous year, September 2006 to September 2011.

Prices for imported goods fall 3.4 percent

Merchandise import prices fell 3.4 percent in the September 2011 quarter. The latest fall follows a 0.5 percent fall in the June 2011 quarter and a 5.4 percent rise in the March 2011 quarter. Excluding petroleum and petroleum product prices, import prices fell 3.6 percent in the September 2011 quarter.

New Zealand Customs Service (NZCS) exchange rates are used to value imports. The NZCS TWI of the New Zealand dollar rose 4.9 percent in the September 2011 quarter, following a 1.1 percent rise in the June 2011 quarter. The New Zealand dollar appreciated against all of our major trading partners' currencies, which had a downward influence on import prices.

The fall in import prices was influenced by:

  • mechanical machinery (down 6.5 percent)
  • food and beverages (down 5.4 percent)
  • electrical machinery and apparatus (down 4.7 percent).

Import prices rise in the year

In the year to the September 2011 quarter, import prices increased 1.2 percent, compared with decreases of 3.1 percent in the year to the September 2010 quarter and 8.5 percent in the year to the September 2009 quarter.

Mechanical machinery prices fall 6.5 percent

The most significant downward contribution to import prices came from mechanical machinery prices, which fell 6.5 percent in the September 2011 quarter. The latest fall follows falls of 3.4 percent and 0.4 percent in the June 2011 and March 2011 quarters, respectively.

In the year to the September 2011 quarter, mechanical machinery prices decreased 15 percent, compared with an 11 percent decrease in the year to the September 2010 quarter and a 7.6 percent increase in the year to the September 2009 quarter.

Graph, Mechanical machinery import price index, annual change from same quarter of previous year, September 2006 to September 2011.

Food and beverage prices fall 5.4 percent

The second-most significant downward contribution to import prices came from food and beverage prices, which fell 5.4 percent in the September 2011 quarter. The latest fall follows a 2.4 percent fall in the June 2011 quarter and a 4.8 percent rise in the March 2011 quarter. The latest fall was influenced by:

  • fruit and vegetables (down 7.1 percent)
  • cereals and cereal preparations (down 4.9 percent)
  • sugar and sugar preparations (down 6.4 percent)
  • alcoholic beverages (down 7.3 percent).

In the year to the September 2011 quarter, food and beverage prices increased 1.4 percent, compared with a 3.8 percent decrease in the year to the September 2010 quarter and a 3.4 percent increase in the year to the September 2009 quarter.

Graph, Food and beverages import index, annual change from same quarter of previous year, September 2006 to September 2011.

Electrical machinery prices fall

Electrical machinery and apparatus prices fell 4.7 percent in the September 2011 quarter, following a 4.0 percent fall in the June 2011 quarter and a 2.1 percent rise in the March 2011 quarter.

In the year to the September 2011 quarter, electrical machinery and apparatus prices decreased 11 percent. The latest annual decrease compares with a 6.6 percent decrease in the year to the September 2010 quarter and a 7.8 percent increase in the year to the September 2009 quarter.

Graph, Electrical machinery and apparatus import price index, annual change from same quarter of previous year, September 2006 to September 2011.

Import prices for broad economic categories fall

In the September 2011 quarter, all of the three broad economic categories showed price falls:

  • capital goods (down 5.4 percent)
  • consumption goods (down 3.4 percent)
  • intermediate goods (down 3.0 percent).

 Graph, Import prices by broad economic category, quarterly, September 2007 to September 2011.

Capital goods prices down 5.4 percent

Capital goods prices fell 5.4 percent in the September 2011 quarter, following a 3.4 percent fall in the June 2011 quarter and a 0.3 percent rise in the March 2011 quarter. Capital goods excluding transport equipment (down 5.4 percent) had a significant impact on the fall in capital goods prices in the September 2011 quarter.

Capital goods prices decreased 11 percent in the year to the September 2011 quarter, compared with a 7.7 percent decrease in the year to the September 2010 quarter and an 8.5 percent increase in the year to the September 2009 quarter.

Consumption goods prices fall 3.4 percent

Consumption goods prices fell 3.4 percent in the September 2011 quarter, following a 1.1 percent fall in the June 2011 quarter and a 2.4 percent rise in the March 2011 quarter. The latest decrease was influenced by:

  • processed food and beverages (down 4.0 percent)
  • semi-durable consumer goods (down 3.3 percent)
  • non-durable consumer goods (down 3.0 percent)
  • durable goods (down 4.0 percent).

Annually, consumption goods prices decreased 4.0 percent in the year to the September 2011 quarter, compared with a 4.4 percent decrease in the year to the September 2010 quarter and a 3.3 percent increase in the year to the September 2009 quarter.

Intermediate goods prices fall 3.0 percent

Intermediate goods prices fell 3.0 percent in the September 2011 quarter, following rises of 0.9 percent and 9.0 percent in the June 2011 and March 2011 quarters, respectively. Prices for processed industrial supplies (down 3.0 percent) and parts and accessories of capital goods and transport equipment (down 4.5 percent) were the main contributors to the September 2011 fall.

Intermediate goods prices increased 8.4 percent in the year to the September 2011 quarter, compared with decreases of 0.8 percent in the year to the September 2010 quarter and 20 percent in the year to the September 2009 quarter.

Terms of trade for services rise 3.1 percent

The terms of trade for services rose 3.1 percent in the September 2011 quarter due to export prices (down 0.1 percent) falling less than import prices (down 3.0 percent).

In the year to the September 2011 quarter, the terms of trade for services increased 6.1 percent, compared with a 3.1 percent decrease in the year to the September 2010 quarter and a 4.2 percent increase in the year to the September 2009 quarter.

Prices fall more for import services than for export services

Services export prices were flat (down 0.1 percent) in the September 2011 quarter, following a 0.4 percent fall in the June 2011 quarter and a 1.7 percent rise in the March 2011 quarter. The latest fall was influenced by lower prices for:

  • other services (down 1.5 percent)
  • transportation (down 1.4 percent).

In the year to the September 2011 quarter, services export prices increased 1.8 percent. The latest annual increase compares with a 0.2 percent increase in the year to the September 2010 quarter and a 1.3 percent decrease in the year to the September 2009 quarter.

Graph, Services price and terms of trade indexes, quarterly, September 2007 to September 2011.

Services import prices fell 3.0 percent in the September 2011 quarter. This fall follows rises of 0.5 percent in the June 2011 quarter and 2.6 percent in the March 2011 quarter. The main contributions came from:

  • travel (down 4.7 percent)
  • transportation (down 3.0 percent)
  • other services (down 1.6 percent).

In the year to the September 2011 quarter, services import prices decreased 4.1 percent, compared with a 3.4 percent increase in the year to the September 2010 quarter and a 5.3 percent decrease in the year to the September 2009 quarter.

New Zealand dollar appreciates against most major trading partner currencies

According to the exchange rates published by the Reserve Bank of New Zealand, the trade weighted index (TWI) of the New Zealand dollar rose 4.2 percent in the September 2011 quarter following a 2.7 percent rise in the June 2011 quarter. The New Zealand dollar appreciated against the United States dollar (up 4.2 percent), United Kingdom pound (up 5.6 percent), Australian dollar (up 5.3 percent), and the euro (up 6.0 percent). The New Zealand dollar depreciated against the Japanese yen (down 0.7 percent).

Exchange rates used to calculate merchandise import values differ from the weekly exchange rates used to calculate 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 (when the item was imported or exported) and are then applied for two weeks. Therefore, there is a lag of 11 to 25 days between the exchange rates used by the NZCS compared with the exchange rates the Reserve Bank publishes. See Data quality for more information.

Graph, Merchandise trade indexes and average trade weighted index, quarterly, September 2007 to September 2011. Graph, Services trade and average trade weighted index, quarterly, September 2007 to September 2011.

For the September 2011 quarter, the NZCS TWI rose 4.9 percent, with the New Zealand dollar rising against all of our five major trading partners' currencies.

An appreciating New Zealand dollar has a downward 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.

Exchange rates for September 2011 quarter
New Zealand Customs Service
USA
(NZ$:US$)
UK
(NZ$:pound)
Australia
(NZ$:A$)
Japan
(NZ$:yen)
Euro
(NZ$:euro)
Trade weighted index
Change from Jun 2011 quarter (%) 6.0 7.3 4.6 1.3 6.5 4.9

Updates to previously published material

September 2011 quarter merchandise overseas trade indexes (prices)
Export price index Import price index Terms of trade index
Series ref: OTPQ SEO1E95 SIO1I95 STTZZ5
Provisional Jun 2011 qtr
Published 1 Sep 2011
1210 934 1295
Final Jun 2011 qtr
Published 1 Dec 2011
1211 934 1296