U.K. Trade Deficit Stays Stable

The U.K. trade deficit was unchanged in July on the month earlier but exports and imports both recorded their largest increases since January 2008 in the latest sign that the global economy is improving.

The revival in key European Union economies was a central driver of the improved U.K. exports. Sales of goods to France and Germany increased by almost £700 million ($1.15 billion) in July from the prior month, more than two thirds of the total £913 million exports rise.

The U.K. global goods deficit was £6.5 billion in July, the Office for National Statistics said Wednesday. June's deficit was revised up from £6.4 billion.

The value of goods exports increased 5% in July on the month, the strongest rise since January 2008. Excluding oil, exports increased 4.5%, the strongest rise in a year. ONS said autos exports was the strongest sector, with exports rising 19%. Foreign sales of chemicals rose 7%, while exports of oil and other semi-manufactured goods also increased.

Imports of goods increased 3.5% from a month earlier, also the strongest rise since January 2008. Higher imports of capital goods and semi-manufactured products led the way.

However in the three months to July, exports remained 16.2% lower on the year, while imports were 17.2% lower.

Excluding oil and erratics, the global trade in goods deficit was £5.5 billion in July, which is the narrowest gap since March 2006.

Economists said there was every sign that U.K. exports could continue to increase.

The goods trade deficit with non-European Union countries widened to £3.9 billion in July from £3.7 billion in June.

The goods trade deficit with EU countries narrowed to £2.6 billion from £2.8 billion in June.

Export and import prices both fell 0.5% from a month earlier.

U.K. Trade Deficit Stays Stable

TradingEconomics.com, Bloomberg
9/9/2009 9:22:50 AM