U.K. Trade Gap Narrows On Car Exports; Construction Output Slumps
October 09 2015 - 4:38AM
RTTF2
The U.K. visible trade deficit narrowed in August as car exports
reached a record high and imports decreased from July. However, the
deficit remained at higher levels. Elsewhere, the sharpest decline
in construction output since late 2012 also signaled weak
contribution to the economy in the third quarter.
The deficit on trade in goods fell to GBP 11.1 billion from GBP
12.2 billion in July, the Office for National Statistics reported
Friday. Nonetheless, it was well above the expected shortfall of
GBP 9.9 billion.
Exports of goods climbed GBP 0.8 billion to GBP 23.6 billion in
August. The increase was attributed to a GBP 0.6 billion growth in
shipment of cars to a record high of GBP 2.4 billion.
Meanwhile, imports fell GBP 0.3 billion to GBP 34.7 billion.
IHS Global Insight Economist Howard Archer noted that the
July/August data highlight that the trade sector remains a major
concern for the UK even though the trade deficit came down markedly
in the second quarter and net trade made a strong positive
contribution to second quarter GDP growth of 0.7 percent
quarter-on-quarter.
The trade deficit with EU nations was unchanged at GBP 7.4
billion, while that with non-EU countries declined to GBP 3.8
billion from GBP 4.8 billion.
The balance of trade in services showed a surplus of GBP 7.9
billion versus a GBP 7.8 billion surplus a month ago. As a result,
the total trade shortfall narrowed to GBP 3.3 billion from GBP 4.4
billion in the previous month.
Another report showed that construction output dropped 4.3
percent in August from July, when it fell 1 percent, confounding
expectations for a 1 percent gain.
The pace of decline was the fastest since December 2012, when
output decreased 5.1 percent.
Year-on-year, construction output declined 1.3 percent in
August, defying forecasts for 1.4 percent growth.
Paul Hollingsworth at Capital Economics said the latest figures
add to other evidence suggesting that the recovery slowed in the
third quarter, and remained unbalanced.
However, with consumer and business confidence remaining strong,
real wages rising robustly and credit conditions improving, the
economist remains confident that the recovery will regain pace
soon.
The Bank of England expects the economy to expand 0.6 percent in
the third quarter.
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