It is the largest October trade deficit in six years and sent the annual trade balance into deficit for the first time since December last year.
The contraction of exports to New Zealand's largest trading partner, China, was cushioned with exports to our former largest trading partner, Australia, rising by $32 million, or 4%, due to crude oil.
The Statistics New Zealand data showed total goods exports were down $215 million, or by 5.1%, compared to October last year, while the value of imported goods rose $525 million, or 12% to $4.9 billion.
SNZ international statistics manager Jason Attewell said milk powder exports to China fell, following record prices and quantities of late 2013, contributing to a 40% fall in exports to China.
Westpac senior economist Michael Gordon said the $908 million deficit was a surprise, given the markets expected a $642 million deficit and Westpac had forecast $700 million.
Exports for October stood at $4.026 billion and imports at $4.935 billion.
''The result sent the annual trade balance into deficit for the first time since December last year.
''Both exports and imports were higher than expected,'' Mr Gordon said. While the upside surprise on exports would probably prove to be temporary, the strength of imports was consistent with recent signs that domestic demand was ''getting a fresh lease of life'', he said.
Similarly, ASB economist Nathan Penny had expected the trade deficit to be about $250 million smaller, at $650 million, due to import values being stronger than expected. He said the downward trend in export values remained firmly in place.
''The main culprit is falling dairy export prices. Dairy export values fell nearly 9% in seasonally adjusted terms in October, and have now fallen in six of the last eight months. In that sense, there is more to come,'' Mr Penny said.
On a cumulative basis, dairy export prices had only fallen by about a quarter, while overall dairy auction prices had fallen closer to 50%.
''As a result, we expect those dairy auction price falls to further flow through to trade data over coming months,'' Mr Penny said.
Imports from China rose 18% to $144 million, led by fertiliser and mobile phones, while milk powder, butter and cheese exports overall fell 24% to $1.1 billion, compared to October last year.
''While the dairy export fall from grace story is front of mind for many, the recent import strength is an emerging theme,'' he said.
Imports had lagged behind recent strong economic activity levels, he said.
Imports rose across all three categories, with capital goods, such as aircraft and machinery, rising 31% to $239 million. Intermediate goods, like industrial supplies, increased 7.7% to $153 million and consumption goods, such as video games or processed food and beverages, were up 8.7% to $99 million, BusinessDesk reported.
