UK trade: September 2017

• In the three months to September 2017, the total UK trade (goods and services) deficit widened by £3.0 billion to £9.5 billion; this was largely due to an increase in imports of goods, primarily due to increased imports of machinery, unspecified goods (including non-monetary gold) and fuels, partially offset by a decrease in imports of aircraft.

• Imports of goods from both EU and non-EU countries increased between the three months to June 2017 and the three months to September 2017; exports to EU countries increased by £0.9 billion, while exports to non-EU countries fell by £1.7 billion in the same period.

• The UK’s total trade deficit (goods and services) narrowed by £0.7 billion between August and September 2017; this was primarily due to increased exports of unspecified goods (including non-monetary gold).

• The UK’s total trade deficit (goods and services) excluding erratic commodities narrowed by £0.1 billion to £3.8 billion between August 2017 and September 2017; mainly due to an increase in goods exports excluding erratic commodities.

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 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 July 2017 for both goods and services.

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.

Between the three months to June 2017 and the three months to September 2017 (Quarter 2 (Apr to June) 2017 to Quarter 3 (July to Sept) 2017), total trade (goods and services) exports decreased by 0.2% (£0.3 billion), while total trade imports increased by 1.6% (£2.6 billion). This resulted in a widening of the total trade (goods and services) deficit by £3.0 billion to £9.5 billion.

The total trade in goods deficit increased by £4.0 billion to £35.7 billion, primarily due to increases in imports of £3.2 billion and a decrease in exports of £0.8 billion. The main contributors to the increase in imports were machinery, unspecified goods and fuel. Exports of fuel and chemical goods fell in the three months to September 2017, but these were partially offset by increases in exports of other commodities.

The increase in the trade in goods deficit was partially offset by a £1.0 billion increase in the trade in services surplus, primarily due to an increase in exports of other business services (such as engineering services and other trade-related services).

The widening of the deficit in the three months to September 2017 increases slightly when trade in erratic commodities are excluded. Between the three months to June 2017 and the three months to September 2017, the value of the total UK trade (goods and services) deficit excluding erratic commodities widened by £3.4 billion to £10.2 billion.

The modest impact of erratic commodities (including ships, aircraft, precious stones, silver and non-monetary gold) is consistent with the trend in the first two quarters of 2017 (January to March and April to June). In the three months to September 2017, the increase in imports of unspecified goods (including non-monetary gold) was offset by decreases in imports of other commodities within the “erratics” series.

Exports of goods to non-EU countries decreased by £1.7 billion (3.8%) between the three months to June 2017 and the three months to September 2017. As shown in Figure 2, this was due to decreases in exports of fuels (£1.6 billion) and chemicals (£1.0 billion), which offset increases in exports to non-EU countries of other commodities over the same period.

Exports of goods to EU countries increased by £0.9 billion (2.2%) between the three months to June 2017 and the three months to September 2017. The main contributor was increases in exports of transport equipment (predominately cars), which increased by £0.7 billion.

Imports of goods from EU and non-EU countries increased by £1.7 billion (2.7%) and £1.5 billion (2.8%) respectively between the three months to June 2017 and the three months to September 2017, as shown in Figure 3.

The increase in imports of unspecified goods (including non-monetary gold) and fuels from non-EU countries represents the largest increase in import commodities, alongside increases of mechanical and electrical machinery, material manufactures and fuel imports from EU countries.

Overall, erratic commodities have a larger impact on non-EU exports and imports, in comparison with trade with EU countries, as erratic commodities traded with non-EU countries are generally larger in value than erratic commodities traded with other EU countries.

As shown in Figure 4, since 2011 there has been a downward trend in the trade in goods balance with EU countries. While the trend in the trade in goods balance with non-EU countries has been flatter, the impact of erratics has caused more volatility on the three-month on three-month movements over the last 10 years to September 2017. This is mainly due to the impact of trade in non-monetary gold with non-EU countries.

Between the three months to June 2017 and the three months to September 2017, both the trade in goods deficit including and excluding erratic commodities with non-EU countries widened by £3.2 billion.

In contrast, the trade in goods deficit with EU countries widened to a greater extent when excluding erratics than when erratics were included, by £1.2 billion compared with £0.8 billion respectively, between the three months to June 2017 and the three months to September 2017. This is because the UK tends to export more erratic commodities to the EU countries than it imports.

Between the three months to June 2017 and the three months to September 2017, export volumes decreased by 1.8% – the first time since September 2016 on a three-month on three-month basis – while import volumes increased by 1.9%, which is the third consecutive three-month on three-month growth. Export and import prices increased by 0.8% and 1.5% respectively, following a decrease in both prices in the three months to June 2017. This coincides with a decrease in the value of sterling in the three months to September 2017. These movements contributed to a small decrease of 0.9% in trade in goods export values and a 2.7% increase in trade in goods import values.

While economic theory suggests that a depreciation in the value of sterling should result in a decrease in export prices (export prices increasing in competitiveness) and an increase 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 the sterling depreciation on export and import volumes and prices.

Figure 5: Three-month on three-month UK goods export values, volumes and prices

March 2013 to September 2017

Source: Office for National Statistics

Download this image Figure 5: Three-month on three-month UK goods export values, volumes and prices

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Figure 6: Three-month on three-month UK goods import values, volumes and prices

March 2013 to September 2017

Source: Office for National Statistics

Notes:

1. The data download for Figure 6 was added on 30 November 2017 at 12:40pm.

Download this image Figure 6: Three-month on three-month UK goods import values, volumes and prices

.png (17.4 kB) .xls (17.9 kB)

Between the three months to June 2017 and the three months to September 2017, the 0.4% increase in the volume of goods exported to EU countries was offset by a 3.8% decrease in the volume of goods exported to non-EU countries. Over the same period, the volume of goods imported from both the EU and non-EU countries increased by 1.2% and 2.9% respectively.

The total trade deficit (goods and services) narrowed by £0.7 billion between August 2017 and September 2017; primarily due to trade in goods exports increasing by £1.3 billion, partially offset by £0.2 billion increase in imports of goods and £0.4 billion decrease in trade in services surplus.

The increase in trade in goods exports was primarily due to unspecified goods (including non-monetary gold). The UK’s total trade deficit (goods and services) excluding erratic commodities narrowed by £0.2 billion to £3.6 billion between August 2017 and September 2017; mainly due to an increase in goods exports excluding erratic commodities by £0.8 billion.

Since the last UK trade release, there have been revisions across exports and imports of trade in goods and services for July and August 2017. The trade balance has been revised up £1.0 billion and £2.2 billion in July and August 2017 respectively.

The largest revision was to imports of goods, with a downward revision of £1.8 billion in August 2017, and £0.6 billion in July 2017. This was mainly due to a revision to the imports of erratic commodities.

Trade in services exports have been revised up by £0.3 billion for both July and August 2017. This is due to survey data replacing earlier estimates.

Supplementary quarterly data analysed by product according to the UK trade in goods by classification of product by activity (CPA 2008) are also available.

The complete run of data in the tables of this statistical bulletin are also available to view and download in other electronic formats free of charge using our time series data website service. You can download the complete statistical bulletin in a choice of formats, or view and download your own selection of individual series.

Data are available by commodity and partner country separately, but not commodity by partner country. However, one of our objectives in the UK trade development plan is to produce these breakdowns in the future. Commodity by country breakdowns are available via HM Revenue and Customs, but on an Overseas Trade Statistics (OTS) basis only. These aggregate estimates will differ slightly from those that are published by us on a Balance of payments (BoP) basis, as the two sets of data are compiled using different concepts.

We now publish the proportion of sales that are exports in the manufacturing industries as an Excel table to accompany the Index of Production release. The proportion of export sales have been published for industries collected by the Monthly Business Survey where the value of exports are reported as well as the total turnover. These are non-seasonally adjusted series.

On 28 October 2016, we published an article containing information on trade – Why has the value of the pound been falling and what could this mean for people in the UK?

On 5 September 2016, we published a short story on the UK trade and investment relationship with the US. This is part of a series that began in June 2015; previous topics cover South America, China and Africa.

Additional statistical data and analyses for UK trade statistics that have not been included in our standard publications are also available.

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:

• response rates

• revision triangles

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