August 2023 presented a multifaceted economic landscape for New Zealand, as revealed by the latest data from Statistics NZ. The nation experienced contractions in both its export and import sectors compared to the same month last year.
Specifically, goods exports contracted by 5.6%, settling at $5.0 billion. This decline was exacerbated by a 3.8% drop in dairy exports, encompassing key commodities like milk powder, butter, and cheese, amounting to $984 million.
Meat exports, another cornerstone of New Zealand’s economic framework, also saw a significant reduction of 15%, totalling $621 million. In contrast, the wool sector displayed resilience, with exports rising by 7.4% to $31 million.
On the import side, the numbers for August were marked at $7.3 billion, showing an 8.1% decrease from the previous year. While specific categories like vehicles and machinery saw an uptick, petroleum and its derivatives experienced a notable decline of 16%. Consequently, the trade balance for August 2023 stood at a deficit of $2.3 billion.
Taking a more expansive annual perspective, the year leading to August 2023 witnessed a modest 3.8% increase in goods exports, culminating in an impressive $71.4 billion. Dairy products were the standout performers, surging by 9.1% to $20.8 billion. However, the overall trade balance remained in a deficit, indicating a shortfall of $15.5 billion.
Trade dynamics with China, a pivotal partner for New Zealand, were suboptimal. Monthly goods exports to the Asian giant decreased by 18% to $1.2 billion, and on an annual scale, they shrank by 2.6% to $19.7 billion. Imports from China followed a similar downward trajectory.
The Real Estate Institute of NZ highlighted a decline in farm sales in the real estate sector. The quarter leading up to August 2023 registered 175 farm sales, marking an 18% drop from the preceding quarter. The median price per hectare for these transactions was pegged at $24,920, reflecting a 15% decrease.
On the corporate front, ANZ’s Business Outlook Survey for September painted a cautiously optimistic picture, with a net 1.5% of businesses expecting improved economic conditions in the forthcoming year.
However, the agricultural sector’s outlook was more subdued. As measured by the Westpac McDermott Consumer Confidence report, consumer sentiment took a hit in the September quarter, with the index falling to 80.2, indicating growing economic scepticism among New Zealanders.
Transport indicators, as outlined in ANZ’s Truckometer for August 2023, showed encouraging signs, with both light and heavy traffic volumes on the rise. The employment landscape also grew, boasting 2,375,000 positions across various sectors, a 3.3% increase from the previous year.
However, the agricultural sector diverged from this trend, showing a decline in employment numbers.
As October looms, all eyes are fixed on the Reserve Bank, which is gearing up for its monetary policy review on 4 October. The prevailing consensus among experts suggests that the Official Cash Rate (OCR) will likely remain stable.
