1. Main points

  • The trade deficit in goods and services in January 2017 was £2.0 billion, unchanged from December 2016.

  • Between the 3 months to October 2016 and the 3 months to January 2017, the total trade deficit (goods and services) narrowed by £4.7 billion to £6.4 billion.

  • At the commodity level, the main contributors to the narrowing of the total trade deficit in the 3 months to January 2017, were increased exports of non-monetary gold, oil, machinery and transport equipment (mainly electrical machinery, aircraft and cars) and chemicals.

  • The trade in goods deficit for the 3 months to January 2017 narrowed by £4.1 billion to £33.1 billion compared with the 3 months to October 2016.

  • In 2016, excluding oil and other erratic commodities, the underlying trend in trade in goods is a widening of the deficit; with both exports and imports of goods increasing each quarter of the year.

  • Following the UK trade December 2016 release the quarter 4 (October to December) 2016 total trade (goods and services) balance has been revised upwards by £3.5 billion.

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2. Things you need to know about this release

The format and content of this publication changed from January 2017 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, or by emailing trade@ons.gov.uk.

We are undertaking and applying ongoing improvements to UK trade statistics in line with the UK trade development plan and also to address anticipated future demands. We welcome feedback on this development plan.

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 services 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 prices unless otherwise stated. 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 also 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 as it is subject to erratic price fluctuations and therefore volume data are provided in metric tonnes as well as value (£ million).

UK trade is part of the short-term economic indicators theme day, alongside the Index of Production (IoP) which also includes the proportion of turnover from exports, by industry. However, this is not always comparable with UK trade statistics, for a number of reasons. These include, but are not limited to:

  • different data sources – IoP is based on a survey of businesses; UK trade in goods uses administrative data collected by HMRC

  • different concepts and measures – IoP reports the value of exports as a proportion of the industry's turnover; UK trade in goods statistics report the change in ownership between the UK and other countries

  • time lag – there can be time lags between the sale of a product reported in the IoP, and the export of product reported by UK trade

Further information on the IoP and how that index is compiled can be found in the “Things you need to know” section of the IoP release.

This release has a revisions period back to January 2016 for trade in goods and services. 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 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 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.

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3. The deficit on trade in goods and services remains at £2.0 billion in January 2017

The UK’s deficit on trade in goods and services decreased by £0.1 billion between January 2017 and December 2016; when rounded to the nearest £0.1 billion the deficit remains unchanged at £2.0 billion in both months.

The unchanged balance reflects an increase in both exports and imports between December 2016 and January 2017, with exports increasing very slightly more than imports; £0.4 billion and £0.3 billion respectively. At the commodity level, machinery and transport equipment (mainly electrical machinery and cars) and chemicals were the largest contributors to the increase in exports. Oil and chemicals were the largest contributors to the increase in imports.

Between the 3 months to October 2016 and the 3 months to January 2017, the total trade deficit (goods and services) narrowed by £4.7 billion to £6.4 billion. The trade position reflects exports minus imports; the narrowing of the deficit reflected a greater rise in exports (6.3%) than the rise in imports (2.7%). Exports of services increased by 1.7% in the 3 months to January 2017; this led to an increase in the trade in services surplus for that period. Exports of unspecified goods (including non-monetary gold), oil, machinery and transport equipment (mainly electrical machinery, aircraft and cars) and chemicals were the largest contributors to the 3-monthly growth in exports of goods for the same period.

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4. What was the underlying trend in trade in goods, excluding oil and erratics?

The trade in goods deficit narrowed by £0.1 billion to £10.8 billion between December 2016 and January 2017. In the same period, imports of oil increased from the non-EU countries, specifically Norway, which restricted the narrowing of the deficit. However, the erratics series had less impact on the trade in goods deficit in January 2017 than seen in previous months, with both exports and imports of these volatile commodities decreasing.

When removing oil and the erratic commodities (ships, aircraft, precious stones, silver and non-monetary gold) the deficit narrowed by £0.8 billion, to £11.2 billion on the month.

Between the 3 months to October 2016 and the 3 months to January 2017, the deficit of trade in goods (excluding oil and erratics) widened by £2.3 billion to £34.7 billion.

Between 2015 and 2016, there was a large widening of the deficit in trade in goods excluding oil and erratic, from £114.1 billion to £128.2 billion. This follows a widening of the deficit in each consecutive quarter of 2016, with both imports and exports increasing but the value of imports increasing faster overall through the period.

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5. What was the impact of sterling on the prices and volumes of exports and imports of goods?

Between December 2016 and January 2017, export prices increased by 2.1% and import prices increased by 2.5%. The value of sterling was 1.7% lower in January 2017 compared with the December 2016 average, following appreciation in November and December 2016. However, it remains 13.1% lower when compared with January 2016.

The volume of exports in goods excluding oil and erratics has seen 6 consecutive months of growth in the latter months of 2016 and since January 2016 has increased by 6.5%. However, volumes of imports have increased by 9.1% in the same period. This may be a consequence of the fall in the value of sterling, making UK exports more competitive.

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6. Who are the UK’s biggest trade partners?

In 2016, nearly 50% of all UK exports of goods went to just 6 countries: the United States, Germany, France, Netherlands, Republic of Ireland and China. The United States are our biggest export partner, receiving 15.7% of all UK exported goods.

The UK’s largest import partner was Germany in 2016, supplying 14.8% of all goods imported to the UK. Similar to exports, over 50% of the UK’s imports of goods come from 6 countries: Germany, China, United States, Netherlands, France and Belgium.

When analysing these figures 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. It is not possible to quantify this issue precisely, but an article exploring the Rotterdam effect was published in 2015.

Explore the UK’s trade relationships (for goods and services) more with our interactive map.

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7. What are the revisions to 2016 trade values since last month?

Since the last UK trade release, there has been a large upward revision to the total trade (goods and services) balance in Quarter 4 (October to December) 2016. This is mainly caused by an upwards revision to the trade in services surplus, but also reflects revisions to exports and imports of goods.

The trade in services balance (exports less imports) has been revised upwards by £2.7 billion in Quarter 4 2016, to a trade surplus of £26.6 billion. This reflects an upwards revision of £1.7 billion to exports, and a downwards revision of £1.0 billion to imports. Revisions are caused by updated source data, with more complete data coverage for most service activities, in particular for other business services, which sees an upwards revision of £1.6 billion exports and a downwards revision of £1.2 billion imports. Revisions of this nature are typical for the second estimate of any complete quarter, given the data availability at the time of processing the first estimate.

The trade in goods balance has been revised upwards by £0.9 billion in Quarter 4 2016. This is mainly due to downwards revisions to imports, across most commodity groups. The largest revisions were in imports of fuels, machinery and transport equipment, and chemicals. Exports of chemicals and non-monetary gold were also revised down, but an upwards revision to the export of fuels partially offset this. These are volatile commodities, and often prone to revisions.

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9. 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 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

  • 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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