UK’s trade deficit widened in October due to a sharp increase in imports, the Office for National Statistics said on Thursday.
UK’s deficit on trade in goods and services rose to £3.9 billion ($6.15 billion) in October, compared with downwardly revised £3.8 billion ($5.9 billion) in September.
While deficit on trade of goods increased by £0.1($0.15 billion) to £8.5 billion ($13.4 billion) in October month-on-month, surplus on trade of services remained unchanged at £4.6 billion ($7.2 billion).
“October’s UK trade figures add to other recent evidence suggesting that the external sector is finally playing a role in the economic recovery. As already indicated by the expenditure breakdown of Q3 GDP, services exports in the past few months have been revised up fairly significantly – meaning that September’s overall trade deficit has shrunk from £4.6bn to £3.8bn. Admittedly, the deficit is estimated to have widened a bit again in October, to £4.0bn,” said Vicky Redwood, an economist with Capital Economics.
Excluding oil and erratic items, UK’s exports were down 0.5 percent in October compared with last month, but the imports were 4.5 percent higher.
In October, the balance on trade in oil was in surplus by £0.3 billion ($0.47 billion), compared with a deficit of £1.0 billion ($1.5 billion) in September.
UK factory orders continued to rise in December and the manufacturers expect the output growth to be robust in the next three months due to strengthening demand at home and abroad, the Confederation of British Industry (CBI) survey showed on Wednesday.
“The recent pick-up in the survey measures of export orders also bodes well for the next few months. Of course, there are still some clouds on the horizon, most notably the troubles in parts of the euro-zone,” said Redwood.
“Nonetheless, it is obviously of some reassurance that exporters finally appear to be deriving at least some benefit from the combination of a lower pound and recovery in global demand,” Redwood added.