New Zealand recorded a trade deficit widening to $1.22 billion in September (the second deficit of over $1 billion for the second straight month in September), from $1.08 billion in August, larger than the $825 million deficit forecast by economists.

That compares with a $1.36 billion deficit in September last year. “No particular item accounts for the surprise,” said Michael Gordon, senior economist at Wespac.

The country’s exports rose two per cent to $3.69 billion in September, lagging behind the $3.9 billion expected by economists.

Shipments of meat and edible offal rose 33 per cent to $438 million from the year earlier, led by frozen beef, which gained 69 per cent due to higher prices, helping the 2014/15 beef export season reach a record $3.2 billion, the agency said.

Offsetting that, exports of milk powder, butter and cheese fell 32 per cent to $4.91 billion from the year earlier month, led by a 32 per cent decline in whole milk powder. The quantity of whole milk powder fell 11 per cent from the same month a year earlier.

Meanwhile, NZ imports in September fell 1.3 per cent to $4.91 billion, still ahead of the $4.78 billion expected. Imports of capital goods fell 17 per cent with transport equipment down 55 per cent, led by a reduction in aircraft imports. However, underlying imports were strong. Excluding large capital items, September imports rose 8.1 per cent to a record, the agency said.

“The trade balance was weaker than expected, largely due to lower exports,” ASB senior economist, Jane Turner, said in a note. “Much of the weakness was due to a decline in dairy exports. Weak dairy production and export volumes highlight the direct drag this sector will have on the NZ economy.”

In the year through September, the annual deficit was $3.24 billion, larger than the $2.85 billion deficit expected by economists.

Nerine Zoio: nerine@insideretail.co.nz