New Zealand's Second Quarter Export Prices Rise, Boosting Terms of Trade

New Zealand export prices rose in the three months through June, buoyed by overseas demand for dairy products, meat and lumber, boosting the nation’s terms of trade index for a third straight quarter.

Export prices advanced 3.8 percent in the second quarter from the previous three months, Statistics New Zealand said in Wellington today. Import prices gained 1.7 percent. The terms of trade index increased 2.1 percent.

The terms of trade index, which measures the amount of imports New Zealand can buy from a fixed quantity of exports, is recovering after slumping to the lowest level in more than five years in 2009 as the global recession curbed the incomes of farmers and exporters. In the year through June, the index rose 12.7 percent, the most in 31 years, the statistics agency said.

Export prices were led higher by a 6 percent jump in dairy product prices as demand from China and Asia buoyed world commodity prices, today’s report showed. Meat, lumber and crude oil prices also increased.

The gains were posted even as New Zealand’s currency rose 2.2 percent in the second quarter against a basket of currencies of the nation’s trading partners, the statistics agency said.

Significant Turnaround

Finance Minister Bill English last month said the nation’s recovery is being led by the export side of the economy, which has experienced a significant turnaround from the low point of the recession. Exporters of primary goods have increased their output and are enjoying good price rises, English said in a statement on Aug. 26.

A 4.7 percent rise in fuel costs buoyed the gain in import prices, the statistics agency said today. Excluding fuel, the import price index increased 1 percent, it said. Imported sugar, vegetables, phosphate and aluminum oxide prices also rose.

Volumes of exports increased just 0.3 percent as shipments of apples, crude oil and cheese declined. The volume of lumber, wood pulp and paper exports rose to a record. Meat and manufactured goods shipments also increased.

Import volumes gained 1 percent, led by aircraft, fuel and passenger cars, today’s report showed.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

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