WELLINGTON (Reuters) - New Zealand's terms of trade hit a record high in the third quarter, pointing to a brighter outlook for a key growth driver at a time when the rest of the economy is encountering headwinds.
The terms of trade rose 0.7 percent in the three months to the end of September, data from Statistics New Zealand showed on Friday, though it was below economists' forecasts of a 0.9 percent jump.
"The fact that it's hit a new record high is a really new supportive factor for this economy at a time when a few other growth drivers are flattening off and business confidence is looking a little wobblier," said Sharon Zollner, Auckland-based chief economist at ANZ Bank.
The New Zealand dollar <NZD=D4> edged down to $0.6828 after the release from around $0.6839 earlier in the morning, weighed down by the small shortfall versus expectations and a report on Thursday showing that business confidence hit an eight-year low in November.
The terms of trade measures the prices received for a country's exports versus the cost of its imports.
Lower global prices for key New Zealand imports such as oil and electronics were behind a 2.6 percent fall in import prices in the third quarter, outpacing a 1.9 percent drop in export prices, Statistics New Zealand said.
On an annual basis, the terms of trade rose 12.3 percent, driven by this year's recovery in prices for dairy, the country's largest goods export, thanks to lower global supply.
New Zealand's economic growth has slowed this year as the previously booming construction sector suffered from a skill shortage with further headwinds likely as immigration started to ease off record highs.
Firms have also been fretting over the new Labour-led government and its plans to promote more protectionist policies and to slow down price growth in the housing sector.
The terms of trade outcome is largely in line with expectations and is therefore unlikely to alter the Reserve Bank of New Zealand's determination to keep rates on hold at a record low of 1.75 percent, possibly for years, according to economists.
(Reporting by Charlotte Greenfield. Editing by Jane Wardell and Eric Meijer)
