The UK’s deficit on trade in goods and services is provisionally estimated to have narrowed in June to £3.6 billion, from a deficit of £3.7 billion in May. In second quarter, the deficit on trade in goods and services narrowed to £11.7 billion, from an £12.3 billion deficit in the previous quarter.

The latest estimate of the trend suggests that the UK trade deficit is fairly flat in recent months. The notes discuss a number of factors which mean that the initial estimates of the data are less reliable than previously, and which make interpretation of short term movements difficult.

TRADE IN GOODS – JUNE

Value of total trade in goods

The UK''s deficit on trade in goods in June is provisionally estimated at £6.3 billion, compared with £6.4 billion in May. The deficit with EU countries in June was £2.9 billion, unchanged compared with May. The deficit with non-EU countries in June was £3.4 billion, compared with £3.5 billion in May.

In June, total exports of goods rose by five per cent to £19.1 billion and total imports of goods rose three per cent to £25.4 billion. Exports to EU countries rose one and a half per cent and exports to non-EU countries rose ten per cent. Imports from EU countries rose one per cent and imports from non-EU countries rose five and a half per cent. In second quarter, the deficit on trade in goods narrowed by £1.0 billion to £19.8 billion. The deficit with EU countries narrowed marginally to £9.0 billion and the deficit with non-EU countries narrowed by £0.9 billion to £10.8 billion.

In second quarter, exports of goods rose by one per cent while imports of goods fell a half per cent. Exports to EU countries fell by a half per cent while exports to non-EU countries rose by two and a half per cent. Imports from EU countries fell by a half per cent and those from non-EU countries fell by one per cent. The latest estimate of the trend suggests that the whole world goods deficit is fairly flat. The trends in the value of trade show both exports and imports falling in recent months.

Volume of total trade in goods (excluding oil and erratics)

Provisional estimates show the volume of exports rose three per cent from that in May and imports rose four and a half per cent compared with the previous month. In second quarter, exports fell two per cent and imports fell a half per cent compared with the previous three months. Changes in trade associated with VAT MTIC fraud mean that comparisons of volume and prices (both including and excluding trade associated with VAT MTIC fraud) should be treated with a great deal of caution.

Export and import prices (trade in goods)

June’s provisional estimates show that export prices rose a half per cent and import prices rose marginally compared with May. In second quarter, both export and import prices rose two per cent. This led to a slight increase in terms of trade.

COMMODITY ANALYSIS OF TRADE IN GOODS

Trade in oil

In June, the balance on trade in oil was in surplus by £0.3 billion, compared with a deficit of less than £0.1 billion in May. In second quarter, the surplus on trade in oil was less than £0.1 billion, compared with a deficit of £1.0 billion in the previous three months.

Trade in other commodities in second quarter 2007

For exports, among the main commodity groups, only fuels and basic materials showed a rise in volume. Within finished manufactures, exports of intermediate goods fell seven per cent and of capital goods fell six per cent. Exports of cars rose five and a half per cent. Exports of chemicals rose one per cent, while exports of other semimanufactured goods fell one and a half per cent.

For imports, among the main commodity groups, only finished manufactures and fuels showed a fall in volume. Within finished manufactures, imports of capital goods fell six and a half per cent,while imports of cars rose four per cent. Imports of chemicals rose five per cent and imports of other semi-manufactured goods rose a half per cent.

GEOGRAPHICAL ANALYSIS OF TRADE IN GOODS: in second quarter 2007

Exports by country

Within the G7 group of countries, exports to both France and Italy fell by £0.1 billion. Exports to the USA rose by £0.2 billion. Among other countries, exports to Spain fell by £0.3 billion and exports to Belgium and Luxembourg fell by £0.2 billion. Exports to Turkey fell by £0.1 billion. Exports to the Netherlands rose by £0.5 billion. Exports to Norway, Switzerland and China all rose by £0.2 billion. Exports to Finland rose by £0.1 billion.