NZ terms of trade - Westpac

Analysts at Westpac noted the recent release of the NZ terms of trade.

Key quotes:

• Terms of trade: +0.7% (Prev: +1.4%, Westpac f/c: +1.5%, market f/c: +1.3%)
• Export price index: -1.9% (Prev: +2.3%)
• Import price index: -2.6% (Prev: +0.9%)

"New Zealand's terms of trade – the ratio of goods export prices to import prices – rose by 0.7% in the September quarter. This was enough to push it to an all-time high. (The official series goes back to 1957, but unofficial estimates dating back to 1860 suggest that we've also topped the previous record set in 1951). The result was slightly lower than we or the market expected, though with no significant implications for our forecasts.

Export prices fell by 1.9% in the September quarter, spread fairly evenly across all of the major categories. A higher New Zealand dollar over the quarter contributed to some of the price decline.

Import prices fell by 2.6%, mostly due to a larger than expected 12% drop in petroleum prices. Prices for food and manufactured goods imports were also down slightly.

The terms of trade release also provides information on trade volumes, though this doesn't quite line up with the figures used to calculate GDP. Export volumes were 0.3% higher for the quarter. Food exports were down, but manufactured goods exports were up. Import volumes were down 0.7%, reflecting a pullback in petroleum imports after a surge in the June quarter."