The shortfall narrowed to NZ$2.48 billion ($1.7 billion) in the 12 months ended July 31 from a revised NZ$3.11 billion in the year through June, the statistics bureau said in Wellington today. The gap was smaller than a median estimate of NZ$2.53 billion in a Bloomberg survey of seven economists.
Demand for imports is slowing as companies cut investment and as the highest unemployment rate in nine years prompts consumers to reduce spending. As domestic demand slows, New Zealand is looking for overseas sales of commodities such as butter, meat and cheese to fuel economic growth.
Economists monitor a rolling, 12-month trade balance for New Zealand because of volatility in the month-on-month figures, which aren’t seasonally adjusted. In July, there was a trade deficit of NZ$163 million compared with NZ$797 million a year earlier. Economists expected a NZ$150 million gap.
Imports fell 21 percent from a year earlier to NZ$3.34 billion, the statistics agency said. The decline is the second largest drop since 1993 after a 22 percent fall in May.
The drop was led by reduced imports of diesel, crude oil, machinery and passenger cars. Vehicle imports slumped 46 percent. The arrival of aircraft boosted imports by NZ$70 million.
The monthly figures don’t adjust for prices. The value of oil imports dropped 24 percent from a year earlier as prices slumped 46 percent, today’s report showed.
Demand for capital goods is being damped by falling business confidence, which slumped to a record low in the first quarter, according to a survey by the New Zealand Institute of Economic Research Inc. Companies were less pessimistic in the second quarter, the Wellington-based institute said last month.
The jobless rate rose to 6 percent in the second quarter and may exceed 7 percent by mid 2010, curbing demand for imported computers and cars, according to the central bank.
Exports fell 7.3 percent from a year earlier to NZ$3.18 billion, led by crude oil, meat and aluminum, today’s report showed.
Crude oil exports fell 38 percent because prices declined, with volumes unchanged from a year earlier, the agency said. The U.S. imported a shipment of crude from New Zealand in July last year and hasn’t purchased anything since. Crude oil exports to China began in July this year, the agency said.
Overseas shipments of milk powder, butter and cheese, which make up almost one-fifth of total exports, declined 2 percent. The volume of dairy exports rose 54 percent from the year- earlier month, the agency said.
Commodity prices fell 20 percent in July from a year earlier, after adjusting for the New Zealand currency, according to an ANZ National Bank index.
The New Zealand dollar has surged 35 percent against the U.S. dollar in the past six months, cutting export income.