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| UK trade gap narrows despite fears of Brexit slowdown | UK trade gap narrows despite fears of Brexit slowdown |
| (about 2 hours later) | |
| News of a pick-up in exports has fanned hopes the UK economy will finish the year on a strong note, confounding earlier fears that the Brexit vote would spark a sharp slowdown. | |
| Official figures showed the UK’s trade deficit with the rest of the world narrowed more than expected in October as exports rose and imports fell. But statisticians said there was little evidence that the weak pound – which makes UK goods cheaper overseas – was boosting exports. | |
| The Office for National Statistics (ONS) also significantly revised earlier figures to show the UK’s trade deficit in the three months following the Brexit vote had ballooned to a near-three-year high rather than narrowed. The revision followed corrections to the way gold trade had been calculated. | The Office for National Statistics (ONS) also significantly revised earlier figures to show the UK’s trade deficit in the three months following the Brexit vote had ballooned to a near-three-year high rather than narrowed. The revision followed corrections to the way gold trade had been calculated. |
| The deficit on trade in goods was £9.7bn in October, narrowing by £4.1bn from September 2016 and beating economists’ forecasts for £11.8bn in a Reuters poll. That reflected a £2.1bn increase in exports and a £2bn decrease in imports, the ONS said. | The deficit on trade in goods was £9.7bn in October, narrowing by £4.1bn from September 2016 and beating economists’ forecasts for £11.8bn in a Reuters poll. That reflected a £2.1bn increase in exports and a £2bn decrease in imports, the ONS said. |
| Economists highlighted a worse picture when using less volatile figures for the three months to October. They showed goods export volumes fell by 2.1%, while imports rose by 4.4%. | Economists highlighted a worse picture when using less volatile figures for the three months to October. They showed goods export volumes fell by 2.1%, while imports rose by 4.4%. |
| “Given the steep fall in sterling, one would have expected this to be the other way round, with exports rising and imports falling,” said Chris Williamson, chief business economist at the consultancy IHS Markit. | “Given the steep fall in sterling, one would have expected this to be the other way round, with exports rising and imports falling,” said Chris Williamson, chief business economist at the consultancy IHS Markit. |
| ONS statistician Hannah Finselbach echoed that: “Following the EU referendum the UK trade deficit widened in the third quarter of 2016 and then in October it narrowed again,” she said. | ONS statistician Hannah Finselbach echoed that: “Following the EU referendum the UK trade deficit widened in the third quarter of 2016 and then in October it narrowed again,” she said. |
| “There remains only limited evidence so far that the depreciation of sterling has led to a marked increase in UK exports.” | “There remains only limited evidence so far that the depreciation of sterling has led to a marked increase in UK exports.” |
| Taking together goods trade and estimates of the UK’s trade in services such as consultancy and banking, an area where the country runs a surplus, the gap for October was £2bn, a narrowing of £3.8bn from September 2016. | Taking together goods trade and estimates of the UK’s trade in services such as consultancy and banking, an area where the country runs a surplus, the gap for October was £2bn, a narrowing of £3.8bn from September 2016. |
| The revisions made to the third quarter trade figures showed the trade deficit for goods and services was now estimated at £14.9bn, the biggest since the end 2013 and a widening of £6.7bn from the second quarter. The ONS had previously said the deficit had narrowed by £1.7bn in the third quarter. | The revisions made to the third quarter trade figures showed the trade deficit for goods and services was now estimated at £14.9bn, the biggest since the end 2013 and a widening of £6.7bn from the second quarter. The ONS had previously said the deficit had narrowed by £1.7bn in the third quarter. |
| But statisticians said the changes would not affect its estimate that the overall economy grew 0.5% in the third quarter. | But statisticians said the changes would not affect its estimate that the overall economy grew 0.5% in the third quarter. |
| Economists said the latest trade data pointed to a similar pace of expansion for the final quarter of the year. | Economists said the latest trade data pointed to a similar pace of expansion for the final quarter of the year. |
| “While the monthly data are extremely volatile, the narrowing in the trade deficit in October sets a solid base for trade in the fourth quarter,” said Scott Bowman at the consultancy Capital Economics. | “While the monthly data are extremely volatile, the narrowing in the trade deficit in October sets a solid base for trade in the fourth quarter,” said Scott Bowman at the consultancy Capital Economics. |
| “What’s more, trade should be further supported in the coming months by the fall in sterling seen since the EU referendum, which should improve exporters’ competitiveness and encourage domestic production at the expense of imports.” | “What’s more, trade should be further supported in the coming months by the fall in sterling seen since the EU referendum, which should improve exporters’ competitiveness and encourage domestic production at the expense of imports.” |
| Separate figures from the ONS showed construction output, which accounts for around 6% of the economy, fell in October, disappointing expectations of a rise. | Separate figures from the ONS showed construction output, which accounts for around 6% of the economy, fell in October, disappointing expectations of a rise. |
| Output was down 0.6% on the month in October but September’s performance was better than previously expected with output growth revised up to 0.9% from 0.3%. That left construction output was 0.7% higher over the year. | Output was down 0.6% on the month in October but September’s performance was better than previously expected with output growth revised up to 0.9% from 0.3%. That left construction output was 0.7% higher over the year. |
| “Overall the data paint a mixed picture of the sector,” said Kay Daniel Neufeld at the consultancy Centre for Economics and Business Research. | “Overall the data paint a mixed picture of the sector,” said Kay Daniel Neufeld at the consultancy Centre for Economics and Business Research. |
| “Positive contributions to output growth came from new private house building, while a decrease in infrastructure output exerted a drag on growth. The sector continues to face various challenges ranging from financial constraints to a shortage of skilled labour. | “Positive contributions to output growth came from new private house building, while a decrease in infrastructure output exerted a drag on growth. The sector continues to face various challenges ranging from financial constraints to a shortage of skilled labour. |
| “However, given the announcements in the latest autumn statement, we can be cautiously optimistic that investments in infrastructure and housebuilding will support the industry throughout 2017.” | “However, given the announcements in the latest autumn statement, we can be cautiously optimistic that investments in infrastructure and housebuilding will support the industry throughout 2017.” |