New export peak tipped to tail off
March's record $920 million trade surplus was slightly stronger than market expectations but economists say exports, which passed $5 billion for the first time last month, have likely peaked.
Exports in March increased by $672 million, or 15 per cent, on the same month a year ago, driven by particular strength in dairy, meat, logs, wine and fruit.
The country's top trading partner continued to be China, as exports boomed by 54 per cent in the March quarter, compared with last year.
Meat and fruit led the increase in exports for the second consecutive quarter, Statistics New Zealand international statistics manager Jason Attewell said.
This was slightly offset by a fall in dairy product exports of 2.4 per cent.
But, for the month of March, dairy exports were up $474m, or 45 per cent, compared with March last year.
Exports were worth $5.1b last month, led largely by the increase in dairy exports.
"This is the first time monthly exports have exceeded $5b and annual exports have exceeded $50b," Attewell said.
BNZ economist Doug Steel said there were few surprises in the March trade figures.
It was the largest trade surplus for the month but there had been little market reaction following the result.
The healthy surplus and growth in two-way trade, however, were supportive of ongoing economic growth, he said.
"We think the monthly trade figures will look exceptionally good for a few months yet.
"But the double-digit annual export growth rates that we see over the coming few months will eventually fade, as the declines we have already seen in global dairy trade auction prices start to come through in the trade figures with the usual lag," Steel said.
In mid-April, dairy prices continued their recent slide, falling 2.6 per cent at the latest global dairy auction.
The average winning price was US$4047 (NZ$4750) a tonne, down from US$4124 at the previous auction.
Westpac senior economist Michael Gordon said exports had reached what would likely be their peak for the near future.
March was traditionally the strongest month for exports, he said.
"This is likely to mark the peak month for New Zealand's exports, at least for now.
"While dairy prices in the GlobalDairyTrade auction system began to fall sharply in March, these prices related to contracts for delivery in April and beyond."
As such, the impact of these falling prices would likely show in the trade figures over the coming months.
ASB rural economist Nathan Penny said dairy exports continued to lead the data, though March saw meat exports "join the party".
It appeared a recovery in meat-export volumes was now firmly entrenched, he said.
The United Kingdom market was recovering, while the United States and Chinese markets also continued to grow.
"It's hard to pinpoint the exact source of the meat-export recovery, but we can have a stab at a few.
"It may also simply be that production has held up better than expected following the 2013 drought."
Imports during March rose $483m, or 13 per cent, mostly because of a one-off import of a $216m oil-drilling platform.
Penny said import values were lagging for now but the Christchurch rebuild and broader economic recovery were driving a surge in capital exports.
But households continued to show restraint, he said.
"Sure the high NZ dollar and low inflation are helping, but continued modest consumption and consumption goods import growth suggest that households' cautious ways remain intact, at least to a degree."