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United Kingdom: United Kingdom visible trade gap widened unexpectedly in September

2013/11/12

The U.K. visible trade gap widened unexpectedly in September to the highest level in almost a year, driven by a fall in exports and a rise in imports, suggesting that the net trade would be a drag on economic increase.

Official figures as well showed that third quarter construction increase was smaller than estimated in the preliminary GDP statement.

The visible trade gap rose to GBP 9.8 billion in September, the Office for National Statistics said Friday, while it was estimate to narrow to GBP 9.2 billion from GBP 9.6 billion in August. The shortfall was the major since October 2012, at the same time as it reached GBP 9.9 billion.

Exports of goods decreased 0.7 % month-on-month to GBP 25.1 billion for September. On the other hand, imports rose 0.2 % to GBP 34.9 billion.

It is evident that the economy is currently far from seeing a hoped-for rebalancing with a better contribution from exports, said IHS World Insight's Chief UK Economist Howard Archer.

The economic recovery is being led by the consumer, suggests that it won't be long before import request begins to accelerate, Martin Beck at Capital Economics said. Hence, even if exports pick up, the trade deficit may narrow only slowly over the next year, the economist reckoned.

A separate statement from the ONS said construction output for the third quarter grew 1.7 % quarter-on-quarter. The figure was lower than the 2.5 % increase estimated in the flash third quarter GDP statement.

According to Archer, this would mean that GDP increase in the third quarter would be shaved down by 0.05 % point given that construction output accounts for 6.3 % of total output.

Preliminary estimate showed that the economy expanded 0.8 % in the third quarter, the fastest rate since 2010.

The in general trade in goods with the EU revealed a record deficit of GBP 6 billion in September. Meanwhile, visible trade with non-EU nations showed a shortfall of GBP 3.8 billion, down from GBP 4.3 billion deficit in August.

The shortfall on goods trade was partially offset by GBP 6.5 billion surplus on services trade. As a result, the in general trade gap remained at GBP 3.3 billion in September.

In the third quarter, the visible trade gap widened by GBP 3.8 billion to GBP 29.1 billion. Likewise, the total trade deficit increased to GBP 9.7 billion from GBP 5.4 billion.

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