International trade in services by partner country, UK: April to June 2017

This bulletin presents quarterly estimates of UK trade in services statistics by 54 countries for the first time. Previously information was only available for nine non-EU countries. This follows a recent increase to the quarterly International Trade in Services survey at the start of 2017, enabling improvements to be made to the granularity, timeliness and accuracy of trade in services estimates.

The ITIS survey is the main source of UK trade in services data, covering most industries but with a number of exceptions: travel; transport; banking and other financial institutions; higher education; charities, and most activities within the legal profession. The data for these industries are obtained from other sources and are not included in this bulletin. Statistics presented are not seasonally adjusted.

The UK exported more services than it imported in Quarter 2 (Apr to June) 2017, giving a positive net trade balance over that quarter; the value of exports was around double that of imports. Furthermore, exports increased by more than imports between Quarter 1 2017 (Jan to Mar) and Quarter 2 2017, resulting in an improvement in the trade balance.

The United States (£8,377 million) was the largest country for UK services trade in Quarter 2 (Apr to June 2017), while the European Union (EU) was the largest geographical grouping. Within the EU, the UK exported the most to Germany (£2,459 million) in Quarter 2 (Apr to June) 2017.

United States (£4,482 million) and Germany (£1,423 million) were the two largest countries for UK services imports in Quarter 2 (Apr to June) 2017.

Seven of the top ten UK trade in services export and import partners were shown to be European.

Due to increased user demand for more timely and granular trade in services statistics, the Office for National Statistics (ONS) increased the sample size of its quarterly International Trade in Services (ITIS) survey from approximately 1,100 to 2,200 businesses to allow for quarterly estimates by country and broad industry grouping to be produced. The next edition of this bulletin for Quarter 3 (July to Sept) 2017 will be released in January 2018.

The quarterly ITIS survey accounts for approximately 55% and 43% of total UK trade in services exports and imports respectively. The other sources of trade in services data include information from the Bank of England, our International Passenger Survey and administrative data sources.

While trade in services statistics presented in this release only relate to industries covered by the ITIS survey (excluding industries such as transport, travel and banking), we do plan to publish quarterly country estimates covering the whole of the UK economy by the end of 2018. We are also currently developing methods to allow for the production of quarterly trade in services statistics by broad industry grouping, further information can be found in the UK Trade development plan.

Users are advised to be cautious when interpreting changes between quarters given that the series is not seasonally adjusted and few data points are presented. The quarterly ITIS estimates are subject to revision as more businesses’ survey responses are received (further detail on response targets is found towards the end of this release). Further revisions are also expected in the next edition of this publication due to an annual benchmarking process, whereby the most recent annual estimates for 2016 are used to ensure consistency between both the annual and quarterly datasets.

UK exports of services (excluding travel, transport and banking) were £38,537 million during Quarter 2 (Apr to June) 2017, compared with services imports of £17,762 million in the same quarter. The value of UK exports of services was therefore roughly double the value of UK imports of services during this period.

Both exports and imports of services increased in Quarter 2 2017 compared to Quarter 1 (Jan to Mar) 2017. The increase in the value of UK services exports exceeded that of imports, therefore there was an improvement in the trade in services balance during the second quarter.

The broad geographical composition of trade in services shows that the European Union (EU) was the UK’s largest services trading partner in both Quarter 1 (Jan to Mar) 2017 and Quarter 2 (Apr to June) 2017. Services exports to the EU (as shown in Figure 1) accounted for 36.4% of total exports, having risen from £13,637 million to £14,035 million during the second quarter. The main driver of this increase was the Netherlands, where exports rose by £405 million. Within the Netherlands, exports of engineering services (product group definition outlined in table 4) accounted for most of the increase.

North America was the second-largest geographical region, accounting for 22.9% of total exports. The value of exports to North America rose by £396 million to £8,861 million during Quarter 2 (Apr to June) 2017. The United States of America (USA) made the largest contribution to the increase, rising by £397 million. Within the USA, exports of cultural services (product group definition outlined in table 4) saw the largest increase.

The top two regions, EU and North America, together accounted for three-fifths of UK services exports over Quarter 2 (Apr to June) 2017.

Almost all of the regions presented experienced an increase in total exports between Quarter 1 (Jan to Mar) 2017 and Quarter 2 (Apr to June) 2017. Asia saw the largest quarterly increase by region in Quarter 2 (Apr to June), rising by £951 million to £7,279 million. China made the largest contribution to the increase, growing by £246 million.

Table 2 provides exports statistics for the 10 partner countries with the highest quarterly trade in services exports values for Quarter 1 (Jan to Mar) and Quarter 2 (Apr to June) 2017 (trade in services statistics for 54 countries are found in the data downloads accompanying this release). These top ten trading partners accounted for three-fifths of all UK services exports in Quarter 2 2017.

Among these countries, the single largest services export market was the United States, where the UK exported £8,377 million in Quarter 2 (Apr to June) 2017, or 21.7% of the total. This was more than treble the value of the UK’s second-largest export market, Germany, which was £2,459 million or 6.4% of total services exports. It can also be seen that seven of the UK's top ten export markets were European.

The highest value of UK imports (excluding travel, transport and banking) were from the European Union. UK imports from the EU were valued at £7,366 million in Quarter 2 (Apr to June) 2017, an increase of £346 million compared with the previous quarter. The largest contributor to the increase was Sweden, increasing by £164 million. The main services product group contributing to this increase in imports was "current account royalties" (product group definition outlined in table 4).

Services imports from North America reached £4,657 million in Quarter 2 (Apr to June) 2017, an increase of £96 million compared with the previous quarter. Of this increase, the main driver was the USA, where imports increased by £106 million.

Together, the EU and North America accounted for approximately two-thirds of total services imports. While these regions saw an increase in imports between Quarter 1 (Jan to Mar) 2017 and Quarter 2 (Apr to June) 2017, the values of imports from Central and South America, Asia and non-EU Europe fell between these two quarters.

Central and South America recorded the largest decline in imports in Quarter 2 (Apr to June) 2017, declining by £413 million to £360 million. The main driver was Bermuda, whose total imports decreased by £495 million. This decline could mainly be attributed to changes in imports of “other trade in services” product group.

UK imports from Asia fell from £2,966 million in Quarter 1 (Jan to Mar) 2017 to £2,879 million in Quarter 2 ( Apr to June) 2017, a decrease of £87 million. The main contributor to this decrease was Japan, whose total imports decreased by £130 million. This decrease could mainly be attributed to changes in imports of "other trade in services" (product group definition outlined in table 4) product group.

The United States was the country from where the UK imported the highest value of services from in Quarter 2 (Apr to June) 2017. The value of exports was more than treble that of the second-largest source of UK services imports (Germany). Furthermore, seven of the top ten sources of UK services imports were European.

Detailed annual country, industry and product estimates for UK trade in services can be found in the International Trade in Services statistical bulletin published 31 January 2017, which contains annual estimates for periods up to 2015.

Quarterly estimates for total EU, non-EU and nine non-EU countries for total UK trade in services (including industries not covered by this survey) can be found in the UK Economic Accounts (Table B6B) published 23 October 2017, which contains quarterly estimates for periods up to Quarter 2 (Apr to June) 2017.

Detailed annual country-level estimates for total UK trade in services (including industries not captured by the ITIS survey) can be found in Pink Book 2017 published 31 October 2017, which contains annual estimates for periods up to 2016.

The International Trade in Services (ITIS) Quality and Methodology information document contains important information regarding the methodology for producing annual ITIS statistics, specifically:

• the strengths and limitations of these data and how they compare with related data;

• users and uses of these data;

• how the output was created, and

• the quality of the output including the accuracy of these data.

A review of the quarterly ITIS sampling methodology, undertaken between September and December 2016, concluded that the quarterly sample should be doubled to improve the coverage of data collection for 54 countries and broad industrial sections. The new sample design was adopted for the Quarter 1 (Jan to Mar) 2017 reference period. These data have since been compiled and have been released via this bulletin. This change reflects the wider trade transformation programme aimed at improving the quality, granularity and timeliness of trade statistics.

The International Trade in Services (ITIS) survey collects data relating to the amounts spent on both the services imports and exports of UK businesses and collects geographical information regarding the destination of service exports or source of service imports. The data are collected in current prices which relates to the value of the commodities at the time of collection.

10.1 Types of transactions covered

Product: The ITIS survey collects the value of transactions between the UK and residents in other countries in respect of 52 service products. In this publication, references are made to product groupings. The service products that feed each of these groupings are outlined in table 4.

Industry: The ITIS survey collects information regarding the industries of the UK businesses that have conducted international trade in services. The industries are identified using an economic classification that well defines areas of the economy, known as the Standard Industrial Classification 2007: SIC 2007 classification, an internationally-consistent standard industrial classification. This provides a framework for the collection, tabulation, presentation and analysis of data about economic activities. Note that the following industries are not covered by the ITIS survey: travel; transport; banking and other financial institutions; higher education; charities, and most activities within the legal profession.

Geographical: The tables within this publication show the countries to which services are exported, and from which services are imported. The geographical groupings used in the tables are shown in Table 5.

The figures for the European Union (EU) relate to the 27 other member states. Trade with EU Institutions is also included in the EU totals and excluded from the International Organisations totals.

Earnings from third country-trade, that is from arranging the sale of goods between two countries other than the UK and where the goods never physically enter the UK are included. This activity is known as “merchanting”. Earnings from commodity trading are also included. As with merchanting, the service element is the profit or loss.

10.2 Types of transactions not covered

The purpose of the ITIS survey is to record international transactions which impact on the UK’s Balance of Payments, hence businesses are asked to exclude trade expenses such as the cost of services purchased and consumed abroad, from their earnings. Trade in services exports or imports which are invoiced for the export or import of goods are excluded as they are already counted in the estimates for trade in goods.

This publication analyses International Trade in Services (ITIS) survey data for the most recent quarter based upon response data received up to eight weeks after the reference period. It also uses the previous quarter’s data containing response data received up to 20 weeks after the reference period. Values for non-responding businesses have been estimated using the imputation methods outlined in the ITIS QMI document referenced above. ITIS data will be revised in each quarterly bulletin, as response increases between weeks 8 and 20 in the survey round, leading to improved quality of the ITIS survey estimates.

The response rates targets for the quarterly ITIS survey are 77% at 8 weeks after the reference period (used to produce first quarterly estimates in this release) and 85% at 20 weeks after the periods (revising earlier data points in the time series as they are added to this release in future).