UK trade: March 2018

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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11 May 2018 09:43

A small error in the trade in goods excluding oil and erratics import price indices occurred in the UK Trade: March 2018 publication tables and related time series dataset due to a processing error. The error impacted the trade in goods excluding oil and erratics import price index (series ELBA) for the period January 2018 to March 2018 in Table 3, the trade in goods excluding oil and erratics import price index growth rate in Table 4 and the trade in goods excluding oil and erratics import price indices for EU and non-EU (series SHCM and SHEB) in Table 6.

This had no impact on any other series or commentary in the UK trade: March 2018 publication.

The price series have now been corrected and ONS apologises for any inconvenience this may have caused.

You can see all previous versions of this data on the previous versions page.

View superseded version

Cyswllt:
Email James Wells

Dyddiad y datganiad:
10 May 2018

Cyhoeddiad nesaf:
11 June 2018

1. Main points

  • The UK total trade deficit (goods and services) narrowed £0.7 billion to £6.9 billion in the three months to March 2018, due mainly to falling goods imports from non-EU countries.

  • The trade in goods deficit narrowed £1.5 billion with non-EU countries and widened £0.4 billion with the EU in the three months to March 2018.

  • The narrowing goods deficit with non-EU countries was due mainly to falls in imports of machinery and transport equipment (mainly ships and aircraft), and miscellaneous manufactures (mainly clothing and works of art) of £1.3 billion and £0.5 billion respectively in the three months to March 2018.

  • Excluding erratic commodities, the total trade deficit widened £1.2 billion to £8.5 billion; imports of ships and aircraft were the main cause of the movement in erratic commodities, non-monetary gold was not a factor.

  • The fall in imports of goods from non-EU countries was due to declining volumes as import prices rose in the three months to March 2018.

  • In the 12 months to March 2018, the total trade deficit narrowed £13.3 billion to £26.6 billion due to 9.2% export growth exceeding 6.4% growth for imports.

  • The UK’s trade in goods deficit with the EU narrowed £2.9 billion and with non-EU countries widened £0.7 billion in the 12 months to March 2018.

  • Revisions to the total trade balance resulted in an upward net contribution of £0.3 billion for January 2018 and a downward net contribution of £0.2 billion for February 2018.

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2. Things you need to know about this release

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 are sourced mainly from survey data and a variety of administrative sources. The services data are processed quarterly, so monthly forecasts are made to provide a complete trade total. The most recent monthly data can therefore be considered more uncertain.

Trade statistics for any one month can be erratic. For that reason, we recommend comparing the latest three months against the preceding three months and the same three 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. Non-monetary gold can have a particularly large impact on growth rates, due to the large volumes of gold traded on the London markets. Therefore, we also publish data exclusive of these commodities, which may provide a better guide to the emerging trade picture.

In accordance with the National Accounts Revisions Policy, data in this release have been revised from January 2018 to February 2018 for both goods and services data.

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 total trade deficit narrowed £0.7 billion in the three months to March 2018 due to a narrowing of the goods deficit

Figure 1 shows the three-month on three-month UK trade balances for the period September 2013 to March 2018.

The total trade deficit (goods and services) narrowed £0.7 billion to £6.9 billion in the three months to March 2018. This follows three periods when the deficit widened, by £2.5 billion, £3.0 billion and £0.3 billion, in the three months to December 2017, January 2018 and February 2018 respectively.

Total imports and exports both fell, by 0.5% (£0.8 billion) to £164.9 billion and 0.1% (£0.1 billion) to £158.0 billion respectively, although as imports fell by the larger amount the total trade deficit narrowed.

The trade in goods deficit narrowed £1.1 billion to £34.6 billion in the three months to March 2018, which was partially offset by a £0.4 billion narrowing of the trade in services surplus to £27.7 billion. The main cause of the £1.1 billion narrowing of the goods deficit was a fall in goods imports from non-EU countries in the three months to March 2018.

Excluding erratic commodities, the total trade deficit widened £1.2 billion to £8.5 billion in the three months to March 2018. Imports of ships and aircraft were the main cause of the movement in erratic commodities, non-monetary gold was not a factor.

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4. A fall in goods imports from non-EU countries was the main cause of the narrowing of the total trade deficit in the three months to March 2018

Figures 2 and 3 show the contribution of commodities to total EU and non-EU exports and imports for the three months to March 2018.

The UK trade in goods deficit with non-EU countries narrowed £1.5 billion to £9.9 billion in the three months to March 2018, while the deficit with the EU widened £0.4 billion to £24.7 billion over the same period. This resulted in the total trade in goods deficit narrowing by £1.1 billion to £34.6 billion.

The £1.1 billion narrowing of the goods deficit was therefore due mainly to trade with non-EU countries. Respective decreases in non-EU imports of £1.3 billion and £0.6 billion for machinery and transport equipment (mainly ships and aircraft) and miscellaneous manufactures (mainly clothing and works of art).

The largest offsetting contribution to the narrowing of the goods deficit came from fuels, which contributed £0.8 billion, helping to offset the narrowing effect from other commodities. This was mainly a result of increases in imports of fuels of £0.6 billion and £0.5 billion from non-EU and EU countries respectively (Figure 3).

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5. Falling import volumes had the largest impact on the narrowing of the trade in goods deficit

Figures 4 and 5 show the three-month on three-month UK goods import and export values, volumes and prices for the period September 2013 to March 2018.

The value of goods exports increased by less than 0.1% in the three months to March 2018; export prices rose by 0.1% and export volumes increased by 0.1% (Figure 4). This compares with the three months to December 2017 when export values fell 2.0%, due mainly to a 3.2% fall in export volumes.

The value of goods imports decreased 0.9% as a result of a 0.3% fall in import volumes in the three months to March 2018; import prices rose 0.3% over the same period (Figure 5).

In the three months to March 2018, import and export prices both increased at their slowest rate since June 2017 when import and export prices fell by 0.4% and 1.1% respectively. This coincides with a strengthening of sterling since August 2017, which may be having a dampening impact on import and export prices.

While simple economic theory suggests an increase in the value of sterling should result in an increase in export prices (exports decreasing in competitiveness) and a decrease in import prices, in practice the impact of a sterling change is likely to be much more complex. Our Economic review has detailed the economic theory of the expected impact of sterling exchange rate movements on export and import volumes and prices.

Although the increase in total goods import prices may appear contrary to economic theory, while increases in export prices are in line with economic theory, it is important to note that prices are reported in sterling for the UK rather than foreign currency terms. As detailed in the Economic review, changes in prices (on a sterling basis) are likely to be largely attributable to the amount of trade conducted on a foreign currency basis (with EU and non-EU countries) as price changes are lagged in the short-term – therefore, it is possible there may be no change in the price in foreign currency terms.

Import volumes from non-EU countries fell 1.9% in the three months to March 2018, while prices fell by 0.5%, meaning a 3.2% fall in import values from non-EU countries was driven mainly by falling volumes. Export values were up 0.6% as a result of a 0.1% rise in export volumes as export prices fell 0.4%.

The value of imports from the EU increased by 1.0% in the three months to March 2018, which was driven mainly by a 0.9% increase in import volumes, although import prices also increased by 0.8%. Export price growth of 0.7% was the main driver of a 0.7% increase in export value, as export volumes rose less (0.2%).

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6. In the 12 months to March 2018, the total trade deficit narrowed £13.3 billion, which was due mainly to strong export growth for goods and services

Figure 6 shows 12-month on 12-month UK trade balances for the period March 2016 to March 2018.

The total trade deficit (goods and services) narrowed £13.3 billion to £26.6 billion in the 12 months to March 2018. This compares with a £7.8 billion widening of the deficit in the 12 months to March 2017, meaning the UK trade deficit has narrowed over the longer-term.

Goods and services both contributed to the narrowing of the total trade deficit in the 12 months to March 2018; the trade surplus in services widened £11.1 billion to £109.2 billion, while the trade in goods deficit narrowed £2.2 billion to £135.7 billion.

The main factor for the £13.3 billion narrowing of the deficit, however, was strong export growth in the 12 months to March 2018. Total exports increased 9.2% (£52.8 billion) to £628.9 billion, which exceeded a 6.4% (£39.5 billion) increase in imports to £655.4 billion.

Goods exports witnessed the strongest increase, growing 9.3% (£29.4 billion) to £344.9 billion, although services exports were also strong, growing 9.0% (£23.5 billion) to £284.0 billion.

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7. The trade in goods deficit with the EU narrowed £2.9 billion in the 12 months to March 2018, while it widened £0.7 billion with non-EU countries

Figures 7 and 8 show the contribution of goods imports and exports to total EU and non-EU imports and exports for the 12 months to March 2018 compared with the 12 months to March 2017.

The goods deficit with the EU has narrowed over the long-term, although more recently it has widened, which contrasts with the picture for non-EU countries, as the deficit widened over the long-term and has narrowed more recently.

The goods deficit with the EU narrowed £2.9 billion to £94.7 billion in the 12 months to March 2018 and widened £0.4 billion to £24.7 billion in the three months to March 2018. This compares with a £0.7 billion widening of the goods deficit with non-EU countries to £41.1 billion in the 12 months to March 2018 and a £1.5 billion narrowing to £9.9 billion in the three months to March 2018.

Overall (EU and non-EU) the goods deficit narrowed £2.2 billion in the 12 months to March 2018, which was mainly a result of strong export growth for machinery and transport equipment, and chemicals.

A £5.8 billion narrowing of the trade deficit in machinery and transport equipment was the largest contributor to the narrowing of the goods deficit in the 12 months to March 2018, which was a result of strong export growth. Exports increased to the EU (mainly mechanical and electrical machinery) and non-EU countries (mainly mechanical machinery and road vehicles) by £5.4 billion and £3.5 billion respectively.

The second-largest contributor to the narrowing of the goods deficit was a £1.0 billion increase in the chemicals surplus the UK has with non-EU countries, taking the surplus to £11.1 billion (mainly as a result of exports of organic and non-organic chemicals). This was partly offset by a £0.5 billion increase in the chemicals trade deficit the UK has with the EU (due mainly to imports of fertilisers, plastics, and medicinal and pharmaceutical products).

Material manufactures was the largest offsetting contributor to the narrowing of the goods deficit, which was due mainly to increases of imports from EU and non-EU countries of £2.9 billion and £2.4 billion respectively in the 12 months to March 2018.

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8. Revisions

In accordance with the National Accounts Revisions Policy, data in this release have been revised from January 2018 (Figure 9).

Revisions to data for the month January 2018 resulted in an upward net contribution to the trade balance of £0.3 billion; exports were revised upwards while imports were revised downwards.

Revisions to data for the month February 2018 led to a downward net contribution to the trade

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10. 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, 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 2017.

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

The UK trade Quality and Methodology Information report 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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