1. Main points

  • The UK’s deficit on trade in goods and services was estimated to have been £4.2 billion in November 2016, a widening of £2.6 billion from October 2016, which reflects a £3.3 billion increase in imports, partially offset by a £0.7 billion increase in exports.

  • The widening of the deficit in November 2016 is attributed to trade in goods in which there were increased imports from both EU and non-EU countries, partially offset by an increase in exports to EU countries.

  • At the commodity level the main cause of the widening monthly deficit for trade in goods in November 2016 was a widening of the deficit for both semi-manufactures and finished manufactures.

  • Total trade prices for exports and imports fell in November 2016 (1.9% and 1.0% respectively) which coincides with a slight recovery in the value of sterling following consistent falls earlier in 2016.

  • Between the 3 months to August 2016 and the 3 months to November 2016, the total trade deficit for goods and services narrowed by £0.4 billion to £11.0 billion, with exports increasing more than imports.

  • The 3-monthly narrowing of the deficit is attributed to an increase of the trade in services surplus, with the deficit in trade in goods widening slightly as the value of goods imported increased more than the value of goods exported.

Back to table of contents

2. Things you need to know about this release

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. The quality of the HMRC source data for trade in goods is high in terms of the timeliness, comprehensiveness and coverage.

For trade in services, data are less timely than trade in goods estimates, sourced mainly from survey data and a variety of administrative sources. The data are processed quarterly, so monthly forecasts are made to provide a complete trade total. This means latest months are uncertain.

All trade values discussed in the bulletin are in current market 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.

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. However, we also recognise the importance to users of an early estimate of trade; therefore we continue to produce a monthly estimate.

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 publish data exclusive of these commodities, which may provide a better guide to the emerging trade picture. We also provide a separate analysis of oil because it is subject to erratic price fluctuations and therefore volume data are provided in metric tonnes as well as value (£ million).

This release has a revisions period back to January 2015 for trade in services, and October 2016 for trade in goods. This means that we have incorporated additional data for these periods. Revisions can be made for a variety of reasons, the most common include:

  • late responses to surveys and administrative sources, or changes to original returns

  • forecasts being replaced by actual data

  • revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually

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. The Authority's reassessment of UK trade against the Code of Practice for Official Statistics has been completed. We have now addressed some of the requirements of the reassessment of UK trade and are in the final stages of providing evidence on the remaining requirements. We have invested more resource into improving and developing the UK trade statistics, which is supported by the UK Statistics Authority. While developing, and delivering against, our development plan, we will continue to work with the Assessment Team to regain National Statistics status for UK trade statistics.

Back to table of contents

3. The deficit on trade in goods and services widens to £4.2 billion in November 2016

The deficit on trade in goods and services in November 2016 increased to £4.2 billion (current price), compared with a revised deficit of £1.5 billion in October 2016. The widening of the deficit reflects an increase in imports between October 2016 and November 2016. Imports of machinery and transport equipment rose by £1.4 billion, and were the largest contributors to the increase in imports.

Between the 3 months to August 2016 and the 3 months to November 2016, the total trade deficit (goods and services) narrowed by £0.4 billion to £11.0 billion. The trade position reflects exports minus imports; the narrowing of the deficit reflected a greater rise in exports (2.9%) than the rise in imports (2.4%). The increase in exports of services increased the trade in services surplus in the 3 months to November 2016. The exports of machinery and transport equipment and unspecified goods (including non-monetary gold) also increased, but increases in imports of goods (particularly of fuels and material manufactures) led to a widening of the trade in goods deficit during this period.

Back to table of contents

4. What is behind the widening of the trade in goods deficit in November 2016?

In November 2016, the UK’s deficit on trade in goods increased to £12.2 billion, widening by £2.3 billion from October 2016. This follows a sharp narrowing in the trade in goods deficit in October 2016, which was mainly due to increases in the exports and decreases in the imports of “erratic” commodities such as ships, aircraft and non-monetary gold in October 2016. The trade balance of semi manufactured goods (including chemicals, minerals and non-ferrous metals) also narrowed in October 2016, before widening again in November 2016.

As shown in Figure 2, since July 2016 we have seen an increase in the value of goods excluding erratics exported from the UK, but a faster rate of increase in the value of goods excluding erratics imported to the UK.

Exports increased by £0.7 billion (2.8%) to £27.0 billion in November 2016, from £26.3 billion in October 2016. Figure 3 shows the contribution of each commodity group using the fourth revised version of the Standard International Trade Classification (SITC Rev 4) to growth in exports of goods in November 2016 compared with October 2016.

Rises in exports of finished manufactures, fuels and unspecified goods all contributed to the growth of exports between October 2016 and November 2016. Within finished manufactures, exports of machinery and transport equipment rose by £0.4 billion, mainly attributed to increased exports of electrical machinery to EU countries; businesses reported an increase in exports of plugs and sockets to the Netherlands, Germany and France.

Exports of fuels rose by £0.3 billion, attributed to an increase in the export of oil to EU countries, particularly to the Netherlands and France.

Exports of unspecified goods (including non-monetary gold) to non-EU countries rose by £0.3 billion. In contrast to increases in other commodity groups, the exports of semi-manufactures fell by £0.3 billion. This was mainly due to a decrease in exports of material manufactures (such as non-ferrous metals, minerals and precious stones) to non-EU countries.

Imports increased by £3.0 billion (8.4%) to £39.2 billion in November 2016, from £36.2 billion in October 2016. Figure 4 shows the contribution of each commodity group to growth in imports of goods using SITC Rev 4 in November 2016 compared with October 2016.

The largest contributions to the increase in imports between October 2016 and November 2016 were from finished manufactures and semi-manufactures. Within finished manufactures, imports of transport equipment rose by £1.4 billion, following 2 consecutive months of falling import values. This is mainly due to increases in the imports of other transport equipment (ships, aircraft and railway equipment) and electrical machinery (from non-EU countries). The increase in electrical machinery is attributed to an increase in imports of portable data processing machines (for example laptops, tablets) from China.

Imports of semi-manufactures rose by £0.8 billion, which can be mainly attributed to an increase in the import of chemicals from EU countries (up £0.5 billion). Imports of miscellaneous manufactures (such as clothing and footwear, and scientific and photographic equipment) also contributed to the growth of imports in this commodity group.

Back to table of contents

5. The trade in goods deficit widens slightly in the 3 months to November 2016

In the 3 months to November 2016, the deficit on trade in goods was £35.9 billion, widening slightly by £0.1 billion from the 3 months to August 2016. This reflects a larger increase in imports from EU countries (5.0%) than exports to EU countries (2.8%). This increase in imports from the EU is partially offset by an increase in exports to non-EU countries (6.3%), during the 3 months to November 2016 compared with the 3 months to August 2016.

Exports increased by £3.4 billion (4.6%) to £77.9 billion in the 3 months to November 2016, compared with £74.5 billion in the 3 months to August 2016. Figure 5 shows the contribution of each commodity group to growth in exports of goods, using the Standard International Trade Classification (SITC Rev 4) in the 3 months to November 2016 compared with the 3 months to August 2016.

All product groups contributed to the growth of exports between the 3 months to August 2016 and the 3 months to November 2016, but the main contributors were finished manufactures, unspecified goods and semi-manufactures.

Within finished manufactures, the exports of machinery and transport equipment rose by £0.9 billion. This is mainly due to increases in exports of mechanical machinery and cars to non-EU countries and electrical machinery to EU countries. These increases were partially offset by decreases in exports of ships and aircraft to non-EU countries.

Exports of unspecified goods (including non-monetary gold) to non-EU countries rose by £0.9 billion.

There was an increase in the exports of semi-manufactures (mainly chemicals, non-ferrous metals, minerals and precious stones) of £0.8 billion.

Imports increased by £3.5 billion (3.2 %) to £113.8 billion in the 3 months to November 2016, compared with £110.3 billion in the 3 months to August 2016. Figure 6 shows the contribution of each commodity group to growth in imports of goods, using the Standard International Trade Classification (SITC Rev 4) in the 3 months to November 2016 compared with the 3 months to August 2016.

Finished manufactures, fuels and semi-manufactures were the main contributors to the growth of the import value between the 3 months to August 2016 and the 3 months to November 2016.

During the 3 months the imports of machinery and transport equipment (classified within finished manufactures) rose by £0.8 billion. This can be attributed to increases in the import of ships and electrical machinery from non-EU countries, and cars from EU countries. These increases were partially offset by a fall in imports of aircraft from non-EU countries.

In the same period, imports of fuel rose by £1.4 billion (of which £0.9 billion was oil).

Material manufactures (such as non-ferrous metals, minerals, precious stones, and iron and steel) contributed £1.0 billion to the growth in imports of semi-manufactures, as well as an increase in the import of chemicals (by £0.3 billion) from EU countries.

In contrast to other commodity groups, the imports of unspecified goods (including non-monetary gold) had a negative contribution to growth, as imports from non-EU countries fell by £1.6 billion.

Back to table of contents

6. What is the impact of the value of sterling on UK trade in goods prices?

Following the EU referendum, the value of sterling fell sharply against a basket of currencies at the end of June 2016 and into July. Recent depreciation has coincided with upward price pressure on both export and import prices. However, the value of sterling increased in November 2016, 2.7% higher compared with the October average, but it still remains 17.9% lower when compared with November 2015. Comparing October and November 2016, export prices decreased by 1.9% while import prices fell by 1.0%.

Between the 3 months to August 2016 and the 3 months to November 2016, export prices increased by 3.6% and import prices increased by 2.4%. These growth rates are not as high as seen between the 3 months to July and the 3 months to October 2016, but continue the trend in both export and import prices, with both having 10 consecutive 3-months on 3-month growth rate increases.

Further analysis on the effect of the recent depreciation of sterling on trade and producer prices was published in the Economic review: October 2016.

Back to table of contents

7. Which countries are the UK’s biggest trade in goods partners?

The USA was the UK’s top export partner with exports of £4.5 billion in November 2016, an increase of £0.4 billion when compared with October 2016.

Germany was the UK’s top import partner with imports of £6.0 billion in November 2016, an increase of £0.5 billion when compared with October 2016. This was due to an increase in exports of road vehicles and aircraft.

When analysing these balances you should consider the “Rotterdam effect”, where goods initially exported to one country are subsequently re-exported to another country. This might overstate the share of exports going to a particular country, in this case the Netherlands, and so overstate the share of exports going to the EU. It is not possible to quantify this issue precisely, but an article exploring the Rotterdam effect was published in 2015.

Back to table of contents

8. Surplus on trade in services falls to £8.0 billion in November 2016

Information on trade in services is mainly obtained from quarterly surveys, in some cases underpinned by larger annual surveys. This means that the latest months are uncertain, and therefore we mainly analyse the quarterly data in this section.

Between October 2016 and November 2016, the estimated surplus on trade in services fell by £0.3 billion to £8.0 billion. Exports were estimated to have been £20.3 billion and imports £12.3 billion.

In Quarter 3 (July to Sept) 2016, the surplus on trade in services was £25.1 billion; financial services was the largest contributor with a surplus of £11.0 billion.

Between Quarter 2 (Apr to June) 2016 and Quarter 3 2016, exports of services increased by £1.2 billion to £60.9 billion, the main contributors to this increase were insurance services which rose by £0.8 billion and financial services which rose by £0.6 billion. This increase was offset by a decrease in travel services of £0.3 billion. For the same period, imports of services decreased by £1.0 billion to £35.8 billion; the main contributor to this decrease was other business services with a decrease of £1.7 billion. This decrease was offset by increases in financial services (£0.3 billion), travel services (£0.2 billion) and intellectual property services (£0.2 billion).

Between Quarter 2 2016 and Quarter 3 2016, exports of services to EU countries rose by £0.9 billion to £26.6 billion. Imports from the EU fell by £1.1 billion to £16.7 billion over the same period.

The balance of trade in services with non-EU countries widened by £0.2 billion between Quarter 2 2016 and Quarter 3 2016, to £15.2 billion. This increase reflected a rise in exports of £0.3 billion and an increase in imports of £0.1 billion.

In Quarter 3 2016, the largest trade in services surplus was with the USA (£7.0 billion), this was lower than the surplus with EU countries of £9.9 billion.

Back to table of contents

10. What’s changed in this bulletin?

The format and content of this publication have been changed to improve the way we publish economic statistics, with related data grouped together under new "theme" days. This will increase the coherence of our data releases and involve minor changes to the timing of certain publications. For more information see Changes to publication schedule for economic statistics. Please provide us with your feedback on the new style bulletin using our short online survey.

The trade development plan was published for consultation in March 2016. We are grateful for the responses received. We are undertaking and applying ongoing improvements to UK trade statistics in line with this development plan and also to address anticipated future demands. We aim to publish an updated UK trade development plan by the end of January 2017, which will reflect the feedback received from the consultation in March 2016, and new requirements identified with stakeholders since then.

Back to table of contents

11. 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 reference tables. 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 can now be found on our website. 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

  • users and uses of the data

  • how the output was created

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

Back to table of contents