Monday, 02 September 2013 17:00

Terms of trade rise

Written by Pamela Tipa

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Dairy was the main contributor to New Zealand's terms of trade rising 4.9% in the June 2013 quarter, due to rising export prices and falling import prices, Statistics New Zealand says.

Terms of trade is a measure of the purchasing power of New Zealand's exports abroad. An increase means that New Zealand can buy more imports for the same amount of exports. The terms of trade rose for the second consecutive quarter but is still 2.5% below the 37-year high reached two years ago.

"The terms of trade increase of 4.9% reflected higher dairy prices", prices manager Chris Pike says. "Without dairy, the terms of trade would have risen 1.6%."

In the June 2013 quarter:
• export prices rose 3.4%
• import prices fell 1.5% (reflecting lower prices for crude oil and capital goods)
• seasonally adjusted export volumes fell 6.7%
• seasonally adjusted import volumes rose 3.9%, influenced by capital goods.

Dairy exports made a significant contribution to both prices and seasonally adjusted volumes, with milk powder being the largest contributor. In the latest quarter, dairy export:
• prices rose 14%
• seasonally adjusted volumes fell 18%
• seasonally adjusted values fell 6.8%
The price and volume indexes for exports and imports of goods are compiled mainly from overseas merchandise trade data.