UK exports outside EU fall despite weak pound ~ Financial Times


Friday, September 8, 2017

UK exports outside EU fall despite weak pound

Exports of British-made goods to EU increase by £1.8bn, underlining country’s reliance on trade with continental Europe
Freight containers sit on the deck of the Cap San Lorenzo container ship
 The UK’s trade in goods with non-EU countries widened by £2.4bn. Photograph: Bloomberg via Getty Images
Britain’s efforts to expand trade in goods beyond the European Union’s border took a knock in July after official figures showed the deficit with the rest of the world widened following a drop in exports.
The deficit in the trade in goods with non-EU countries widened by £2.4bn while exports to the EU grew to cut the trade gap by £1.3bn.
Analysts had expected the fall in the pound to give a significant boost to exports with the EU and beyond, but the trend since last year’s Brexit vote has shown only a gentle increase in exports and a continuing appetite for imports, despite the higher cost, leaving only a marginal improvement in the net trade position.
Overall, UK exports of goods and services edged down 0.2% month on month in July and were up just 0.6% from one quarter to the next.
The Office for National Statistics added to the gloomy economic news with data showing that the manufacturing sector remained “subdued” in July and the construction industry suffered a large drop in new orders in the three months to the end of June, especially in the housebuilding sector.
Manufacturers improved their output, though this only meant reducing the loss of production of 0.6% in June to 0.1% in July. The ONS said a flurry of new car models helped the motor industry recover ground lost earlier in the year.
Construction sector output dipped by 1.2% and for the fourth consecutive month in July. Looking ahead, new orders fell to the lowest level since 2014 following an 8% slump. Housing orders were down almost 10% on a year ago with public housing the worst affected.
Howard Archer, the chief economic adviser to the EY Item Club, described the trade, construction and manufacturing data as a “mixed bag” that showed the upbeat signals from some manufacturing industry surveys was starting to register in official data, though the trade and construction data “point to a UK economy still struggling to break out of sluggish growth”.
ONS senior statistician Kate Davies said: “Manufacturing remains relatively subdued since the start of the year, though July showed the first significant monthly growth of 2017, with car production increasing partly thanks to new models rolling off the production lines. The usual period of summer maintenance of North Sea oil platforms also failed to materialise for a second month running. 
Lee Hopley, the chief economist at EEF, the manufacturers’ trade body, said there was good news from the export figures, which revealed “robust numbers on manufactured exports”.
She said: “Double-digit year-on-year growth is carrying through to the start of the second half of the year. But, the need to import materials and components at the same rate means the overall deficit isn’t budging.”


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