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UK goods trade deficit highest in 16 months due to rise in global oil prices UK goods trade deficit highest in 15 months due to rise in global oil prices
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The UK's trade in goods deficit jumped to its highest level in 16 months in December as rising global oil prices pushing up the prices of fuel imports, official data on Friday showed. The UK’s trade in goods deficit jumped to its highest level in 15 months in December as rising global oil prices pushing up the prices of fuel imports, official data on Friday showed.
The Office for National Statistics separately reported that the shut down of the Forties pipeline in the North Sea disrupted overall UK industrial production in the month, causing a 1.3 per cent decline.The Office for National Statistics separately reported that the shut down of the Forties pipeline in the North Sea disrupted overall UK industrial production in the month, causing a 1.3 per cent decline.
The ONS said that manufacturing continued to expand in January, with output rising by 0.3 per cent, although the annual rate of growth in the sector declined sharply from 3.8 per cent to 1.4 per cent, The ONS said that manufacturing continued to expand in January, with output rising by 0.3 per cent, the eighth consecutive month of growth for the sector.
On trade, the ONS said goods imports exports rose 1.5 per cent in December to £29bn while imports were up 3.8 per cent at £41.5, leaving the overall balance at £13.6bn, the highest since September 2016.On trade, the ONS said goods imports exports rose 1.5 per cent in December to £29bn while imports were up 3.8 per cent at £41.5, leaving the overall balance at £13.6bn, the highest since September 2016.
However, some analysts said that the latest data was too heavily distorted by oil-related factors to get a clear steer on the performance of the UK economy. UK exports had been supported to some extent by the slump in sterling in the wake of the June 2016 Brexit vote, but imports had also been strong, reducing the positive impact on overall GDP growth.
"We would strongly caution about reading too much into these figures," said Paul Hollingsworth of Capital Economics. However, analysts warned the latest data was too heavily distorted by oil-related factors to get much of a steer on the latest performance of the UK economy.
On a three month basis, UK goods imports were up 0.3 per cent and exports up 2.9 per cent, leaving the trade balance at £37.2bn. “We would strongly caution about reading too much into these figures,” said Paul Hollingsworth of Capital Economics.
And including the UK's usual surplus in services, the overall trade deficit over the period was £10.8bn, up from £7bn in the previous three months. “Overall – nothing to rock the boat here,” said Alan Clarke of Scotiabank.
The price of Brent crude rose around 7 per cent over December to $66.5 a barrel, according to Reuters data. “The monthly industrial output data will become more valuable in one to two months time when they give us clues to the likely pace of Q1 GDP – that could sway the [Bank of England] closer [or] further from a May rate hike.”
The ONS estimates that UK GDP grew by 0.5 per cent in the final quarter of 2017, taking calendar year growth to 1.8 per cent.
The Bank of England on Thursday projected a similar rate of growth in 2018.
On a three month basis, the ONS says UK goods imports were up 0.3 per cent and exports up 2.9 per cent, leaving the trade gap at £37.2bn.
And including the UK’s usual surplus in services, the overall trade deficit over the period was £10.8bn, up from £7bn in the previous three months.
The price of Brent crude rose around 7 per cent over December to $66.5 a barrel, according to Reuters data. It has since come down to $64.61.
The Forties pipeline has also re-opened.
The ONS also released its estimate of construction output for December, showing 1.6 per cent growth in the month on the back of stronger house building and infrastructure output. But the year-on-year growth rate for the sector was still negative at -0.2 per cent.The ONS also released its estimate of construction output for December, showing 1.6 per cent growth in the month on the back of stronger house building and infrastructure output. But the year-on-year growth rate for the sector was still negative at -0.2 per cent.
More follows… The building sector is estimated to have been contracting since the second quarter of 2017.