1. Main points

  • Between the 3 months to February 2017 and the 3 months to May 2017, the total UK trade (goods and services) deficit widened from £6.9 billion to £8.9 billion.

  • The widening of the trade deficit in the 3 months to May 2017 reflects a higher rise in imports than the rise in exports of goods, in particular transport equipment (cars, aircraft and ships), oil and electrical machinery from non-EU countries; a decrease in exports of services also contributed.

  • Between the 3 months to February 2017 and the 3 months to May 2017, the total UK trade (goods and services) excluding erratics deficit widened from £8.6 billion to £9.3 billion.

  • The total UK trade (goods and services) deficit widened by £1.0 billion between April and May 2017 to £3.1 billion, following a narrowing in April 2017; this reflects an increase in imports of goods on the month following a decrease in April 2017.

  • Import prices increased by 0.5% in the 3 months to May 2017 whereas export prices remained flat; however, excluding the impact of falling oil prices, import and export prices grew by 1.0% and 0.5% respectively.

  • Since the last UK trade release, the total trade deficit for Quarter 1 (Jan to Mar) 2017 has been revised down by £0.4 billion to £8.8 billion due to revisions to trade in services in the period.

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2. Things you need to know about this release

On 15 June 2017, the National Statistician announced that pre-release access to Office for National Statistics publications would stop with effect from 1 July 2017. This is therefore the first UK trade release where ministers and other officials did not receive access to the information prior to publication. For more information please see the announcement.

Trade is measured through both imports and exports of goods and or services. Trade in goods reports the level of import and export activity in general merchandise, goods for processing, repairs on goods, goods procured in port and non-monetary gold. Trade in services covers import and export activity across 12 service sectors. The UK trade balance is the headline figure and calculated as total exports less imports in both goods and services. The trade balance reflects the overall net position of the UK, describing whether the UK exports more than it imports (a trade surplus) or whether it imports more than it exports (a trade deficit).

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. This means latest months are uncertain.

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.

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.

This release has a revisions period back to January 2017 for trade in services and revisions for trade in goods to April 2017. This means that we have incorporated additional data for trade in goods for these periods. 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. 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.

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3. The deficit in trade in goods and services widened in the 3 months to May 2017

In the 3 months ending May 2017, imports of total trade (goods and services) increased at a higher rate than exports at 2.1% and 0.8% respectively. This has caused the total trade deficit to widen, driven predominantly by increased imports of goods from non-EU countries; transport equipment (cars, aircraft and ships), oil and electrical machinery were the main contributors to this increase.

When comparing with the same 3 months last year, exports of total trade (goods and services) increased marginally more over the period at 11.9% compared with imports at 11.0%. The value of goods exported to non-EU countries continue to be higher than those exported to EU countries; however the rate of growth has increased at a slightly faster rate to EU countries (15.9%) than non-EU countries (15.0%) over the period.

When excluding erratic commodities (which include ships, aircraft, precious stones, silver and non-monetary gold) the total trade deficit widened from £8.6 billion to £9.3 billion in the 3 months to May 2017. This is because imports increased at a higher rate than exports, (1.4% and 1.0%), following a drop in imports of erratic commodities in the 3 months to February 2017. When comparing the 3 months to May 2017 with the same 3 months last year, exports of goods and services excluding erratic commodities increased more at 12.7%, than did imports at 11.9%.

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4. The deficit in trade in goods and services widened by £1.0 billion to £3.1 billion in May 2017

Between April and May 2017, the total trade (goods and services) deficit widened to £3.1 billion, reflecting an increase in imports on the month (2.7%). The main contributor to this was an increase in imports of trade in goods, partially offset by a slight decrease in imports of services. There was a larger increase in goods imported from non-EU countries, mainly due to increases in mechanical machinery, followed by material manufactures (non-ferrous metals and silver) and oil.

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5. Export and import prices and volumes of goods fall in May 2017 as the value of sterling increases

Between April 2017 and May 2017, goods export and import prices decreased by 1% and 0.8% respectively, coinciding with the value of sterling increasing by 0.5% in May 2017 compared with the April average (Sterling Effective Exchange Rate). Despite the recent increase, sterling remains 9.1% lower when compared with May 2016 – with goods export prices 8.2% and import prices 8.0% higher than May 2016.

Looking at a longer-term picture, between the 3 months to February and the 3 months to May 2017 goods export prices have been flat, and this is the first rolling 3- month period without growth since February 2016. We have seen a small increase in import prices (up 0.5%) in the 3 months to May 2017, but at a slower rate than seen during the past year. However, this is the 16th consecutive 3 month on 3 month growth of import prices. Removing the effect of oil, export and import prices increased in the 3 months to May 2017, by 0.5% and 1.0% respectively – this coincides with the sterling price of crude oil decreasing by 6.2% in the 3 months to May 2017. Given that the UK is a net importer of oil, it seems that the falling oil prices are having an impact on overall import prices.

Between April and May 2017, the volume of goods exported increased by 2.5% (Figure 6). There was an increase in exports to EU countries, partially offset by a decrease in exports to non-EU countries. Import volumes have increased by 4.8% in the month to May 2017, following a drop in April 2017. There was a larger increase in imports from non-EU countries this month.

Monthly series are often volatile; therefore, the rolling 3-month time series are also shown in figures 6 and 7, providing a more comprehensive picture of the underlying trend and the potential impact on the trade balance. Export volumes have increased following the depreciation of sterling since July 2016, but imports are also generally increasing, therefore we are not yet seeing a notable narrowing of the trade deficit.

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

Since the last UK trade release, there have been revisions to trade in services in Quarter 1 (Jan to Mar) 2017 due to more data becoming available in the period. The largest revision increased trade in services exports by £0.5 billion in Quarter 1 2017. The main contributors were upward revisions to Intellectual Property, personal and travel, partially offset by downwards revisions to transport and telecommunication.

Revisions reported in April 2017 are due to both trade in goods and services, the largest of which were downward revisions to both exports (mainly unspecified goods) and imports (mainly chemicals and cars) of goods on the month.

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8. 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
  • 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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