UK trade: Apr 2017

Total value of UK imports and exports of goods together with indices of volume and price, including an early monthly estimate of the value of trade in services.

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Email Hannah Finselbach

Dyddiad y datganiad:
9 June 2017

Cyhoeddiad nesaf:
7 July 2017

1. Main points

  • Between the 3 months to January 2017 and the 3 months to April 2017, the total trade deficit (goods and services) widened by £1.7 billion to £8.6 billion; this followed a narrowing in the 3 months to January 2017 and is mainly due to increased imports in March 2017.

  • At the commodity level, the main causes of the widening of the deficit in the 3 months to April 2017 were increased imports of aircraft, cars and chemicals; however, there was a fall in exports of services during the period.

  • The UK’s total trade deficit (goods and services) narrowed by £1.8 billion between March and April 2017 to £2.1 billion, following a widening in March 2017; this reflects a decrease in imports of goods on the month, with import levels of total trade moving back to the levels seen in February 2017.

  • Imports fell across most commodity groups between March and April 2017, the largest of which were mechanical machinery, oil and cars; this follows increases in imports of these commodities in March 2017.

  • Export and import prices fell in April 2017, coinciding with an increase in the value of sterling.

  • Since the last UK trade release, the trade deficit for Quarter 1 (Jan to Mar) 2017 has been revised down by £1.3 billion to £9.3 billion.

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2. Things you need to know about this release

Trade is measured through both imports and exports of goods and/or services. Trade in goods reports the level of import and export activity in general merchandise, goods for processing, repairs on goods, goods procured in port and non-monetary gold. Trade in services covers import and export activity across 12 service sectors. The UK trade balance is the headline figure and calculated as total exports less imports in both goods and services. The trade balance reflects the overall net position of the UK, describing whether the UK exports more than it imports (a trade surplus) or whether it imports more than it exports (a trade deficit).

Unless otherwise stated, all trade values discussed in this release are in current prices. The time series dataset also includes chained volume measures (series for which the effects of inflation have been removed), and these are indexed to form the volume series presented in the publication tables.

Data are supplied by over 30 sources, including several administrative sources; HM Revenue and Customs (HMRC) covering trade in goods is the largest. For trade in services, data are less timely than trade in goods estimates, and sourced mainly from survey data and a variety of administrative sources. The services data are processed quarterly, so monthly forecasts are created to provide a complete trade total. This means latest months are uncertain.

Trade statistics for any one month can be erratic. For that reason, we recommend comparing the latest 3 months against the preceding 3 months and the same 3 months of the previous year.

Oil and other “erratic” commodities can make a large contribution to trade in goods, but often mask the underlying trend in the export or import values due to their volatility. The “erratics” series includes ships, aircraft, precious stones, silver and non-monetary gold. Therefore, we also publish data exclusive of these commodities, which may provide a better guide to the emerging trade picture.

This release has a revisions period back to January 2017 for trade in goods and no revisions for trade in services. This means that we have incorporated additional data for trade in goods for these periods. This revisions period is consistent with the National Accounts revisions policy.

Due to a series of errors during 2014, the UK Statistics Authority suspended the National Statistics designation of UK trade on 14 November 2014. We have now responded to all of the specific requirements of the reassessment of UK trade and are in the final stages of providing evidence to the Authority. We are undertaking a programme of improvements to UK trade statistics in line with the UK trade development plan that will also address anticipated future demands. While delivering against this plan, we will continue to work with the Office for Statistics Regulation team to regain National Statistics status for UK trade statistics. We welcome feedback on this development plan.

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3. The deficit in trade in goods and services widened in the 3 months to April 2017

Both exports and imports of total trade have predominately seen strong growth over the past 12 months, with the trend continuing through 2017. In the 3 months ending April 2017, imports have increased at a higher rate than exports at 1.3% and 0.2% respectively; the main contributor to this was in March 2017, causing the trade deficit to widen by £1.7 billion to £8.6 billion in the 3 months to April 2017.

Imports of goods from both EU and non-EU countries increased in the 3 months to April 2017. Commodities contributing to the increase of imports are aircraft and cars from EU and non-EU countries and chemicals from the EU.

When excluding erratic commodities (which includes ships, aircraft, precious stones, silver and non-monetary gold), the total trade deficit widened from £9.3 billion to £9.6 billion between the 3 months to January 2017 and the 3 months to April 2017. Erratic commodities had a large effect on the trade balance in the 3 months to January 2017, compared with a smaller contribution from February to April 2017.

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4. The deficit in trade in goods and services narrowed to £2.1 billion in April 2017

Between March and April 2017, the total trade deficit (goods and services) narrowed by £1.8 billion as imports returned closer to trend, falling by 3.5% in April 2017 to £51.9 billion, following a peak in March 2017 . At the commodity level, the main contribution to the fall in imports was from mechanical machinery and oil from non-EU countries and cars from EU countries. Imports of these commodities all increased in March 2017, while exports also fell by a marginal 0.1% over the same period.

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5. Export and import prices of goods fall in April 2017 as the value of sterling increases

As shown in Figure 5, between March 2017 and April 2017, export and import prices decreased by 1.1% and 0.9% respectively, with the value of sterling increasing by 2.2% in April 2017 compared with the March average. This follows an increase in prices last month and a general increase seen during 2016. However, it remains 7.7% lower when compared with April 2016.

Economic theory suggests the recent depreciation should boost export and manufacturing competitiveness as changes in the value of a country’s currency can, all else being equal, make export prices more competitive. For example, if the UK chooses to import everything in dollars and export everything in sterling, a depreciation in sterling would cause UK exports to become more competitive and UK imports to be more expensive. Therefore, it would be expected that export prices would fall and import prices would rise when reported in sterling.

However, in practice, the impact of a sterling change is likely to be much more complex. Evidence suggests that a high proportion of UK exports and imports are traded in foreign currency, so there will not necessarily be a straightforward pass through from the changes in the value of sterling to the value of trade.

Between March and April 2017, the volume of goods exported decreased by 0.1%, with an increase in exports to non-EU countries offset by a decrease in exports to EU countries. Import volumes have decreased by 5.1% in the month to April 2017, following a large growth in March 2017.

Figures 6 and 7 show the export and import of goods volumes. Monthly series are often volatile; therefore, the rolling 3-month time series are also shown to provide a more comprehensive picture of the underlying trend. Export volumes have increased since the depreciation of sterling in July 2016, but imports are also generally increasing, therefore we are not yet seeing a notable narrowing of the deficit.

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6. What are the revisions to trade values since last month?

Since the last UK trade release, there have been revisions to both exports and imports in Quarter 1 (Jan to Mar) 2017.

The total trade in goods and services balance in Quarter 1 2017 has been revised up by £1.3 billion, to £9.3 billion.

The largest revision was to imports of goods, with a downward revision of £1.4 billion in Quarter 1 2017. Imports of services have been revised up by £1.3 billion as survey data replaces forecasts made last month.

Exports of goods have been revised up by £1.2 billion for Quarter 1 2017, with the biggest upwards revisions to fuel and unspecified goods (mainly from non-monetary gold). Exports of services remain broadly unchanged since last month.

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8. Quality and methodology

Trade is measured through both imports and exports of goods and/or services. Data are supplied by over 30 sources including several administrative sources, with HM Revenue and Customs (HMRC) being the largest.

This monthly release contains tables showing the total value of trade in goods together with index numbers of volume and price. Figures are analysed by broad commodity group (values and indices) and according to geographical area (values only). In addition, the UK trade statistical bulletin also includes early monthly estimates of the value of trade in services.

Further qualitative data and information can be found in the attached datasets. This includes data on:

Detailed methodological notes are published in the UK Balance of Payments, The Pink Book 2016.

The UK trade methodology web pages are also available. These have been developed to provide detailed information about the methods used to produce UK trade statistics.

The UK trade Quality and Methodology Information document contains important information on:

  • the strengths and limitations of the data and how it compares with related data
  • uses and users of the data
  • how the output was created
  • the quality of the output including the accuracy of the data
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