The dairy sector has led the way in a lower than expected trade deficit for October, according to figures from Statistics New Zealand.

The country was still $319m in the red for the month, but the return was $138m better than expected.

Exports in October were up 24 per cent to $723m, and Statistics New Zealand overseas trade manager Neil Kelly says strong performances from milk powder, butter and cheese are behind the improvement.

“Of the $723m increase year on year, $418m was due to dairy commodities, or butter, cheese and milk powder.

"As a result of that we had an annual trade surplus balance of $112b, the highest we’ve had in some time.”

Federated Farmers has been quick to point out agriculture’s contribution.

Economics spokesperson Philip York says the emerging Chinese middle class is driving the demand for dairy.

“China has such a huge middle class now, that if they are actually in a bubble they’ll get through it OK I’m sure.

"Nobody makes them buy our products, they’re obviously buying them because they like them, and I’m sure it will stay that way.”

The trade deficit of $319m is less than one third the average of the past five Octobers.