Strong rise in UK exports, but trade deficit widens
10 Nov 2016
In the first full quarter since the EU referendum, UK exports rose strongly, although the trade deficit widened last month much more than anticipated.
According to the latest statistics from the Office of National Statistics (ONS), exports of goods and services rose 6.1 per cent in the three months to September, supported by a 6.1 per cent rise in exports of goods. Exports of services fell 0.1 per cent.
Commentary from IHS Markit does however add that "A sour note is introduced as the ONS data showed the goods trade deficit widening in September alone, linked to a record deficit with EU countries."
The IHS Markit/CIPS Manufacturing PMI survey has indicated a strong upturn in export orders since August, corresponding with the weakened exchange rate.
"The three months to October has been the best period for exporters for five-and-a-half years in terms of winning new overseas orders according to the purchasing managers’ survey, with many firms reporting that the gains have been the result of the more competitive exchange rate," says the IHS Markit report.
"These export order wins should feed through to the trade data in the fourth quarter, helping trade make a further positive contribution to economic growth."
According to the purchasing managers’ survey, the three months to October has been the best period for exporters for five-and-a-half years in terms of winning new overseas orders. The more competitive exchange rate is being reported as the key factor in increasing new business wins.
"These export order wins should feed through to the trade data in the fourth quarter, helping trade make a further positive contribution to economic growth," the IHS Market report concludes.
The US election result and trade between UK and the US
Whilst the financial markets reacted sharply to the US election result with Donald Trump being elected as the next American president, Britain may now be on track towards securing a free trade deal with the United States when it leaves the European Union.
According to data from HM Revenue & Customs, in 2015 Britain imported more than £32 billion of US goods, while the UK exported £38 billion of goods to America.
In a recent interview with the BBC, Trump's trade adviser, Dan DiMicco, described the UK as a "friend" and "like-minded" to America. This could well be more positive news for UK exports post-Brexit. It's early days, but we will watch this space!
Beavis Morgan – advisers to Britain’s SMEs
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Contact our specialist advisers at Beavis Morgan for guidance and strategic advice to help in formulating plans for your business in order to strengthen its prospects of success, achieve growth and maximise wealth.