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Surprise fall in UK's trade gap
Cannon_Fodder
Posts: 3,980 Forumite
http://newsvote.bbc.co.uk/1/hi/business/7880829.stm
The UK's deficit on trade in goods with the rest of the world fell to an 18-month low in December.
Britain's goods trade gap fell to £7.367bn from a record £8.114bn in November, the Office for National Statistics (ONS) said.
That was the lowest the gap - the difference between imports and exports - has been since June 2007 and was well below analysts' forecasts of £8.1bn.
The narrowing gap was driven by a 2.5% fall in imports.
The ONS said the fall in demand for overseas goods may have been as a result of the weak pound, however, it also noted that the deficit was coming down from a record level in November.
Total exports were up slightly in December, 0.5% higher than the previous month.
The ONS provisionally estimated the trade deficit for 2008 as a whole at £93.2bn, compared with £89.3bn in 2007.
'Surprisingly upbeat'
Analysts welcomed the data but were cautious about the overall economic outlook.
"The latest UK data gave a surprisingly upbeat picture of the economy around the turn of the year," said Vicky Redwood from Capital Economics.
"Overall it's nice to have some good news for a change. Sadly we're unlikely to get much more," she added
Howard Archer from Global Insight said: "The bad news is that this narrowing in the deficit was due to weakness in imports rather than strength in exports."
The UK's deficit on trade in goods with the rest of the world fell to an 18-month low in December.
Britain's goods trade gap fell to £7.367bn from a record £8.114bn in November, the Office for National Statistics (ONS) said.
That was the lowest the gap - the difference between imports and exports - has been since June 2007 and was well below analysts' forecasts of £8.1bn.
The narrowing gap was driven by a 2.5% fall in imports.
The ONS said the fall in demand for overseas goods may have been as a result of the weak pound, however, it also noted that the deficit was coming down from a record level in November.
Total exports were up slightly in December, 0.5% higher than the previous month.
The ONS provisionally estimated the trade deficit for 2008 as a whole at £93.2bn, compared with £89.3bn in 2007.
'Surprisingly upbeat'
Analysts welcomed the data but were cautious about the overall economic outlook.
"The latest UK data gave a surprisingly upbeat picture of the economy around the turn of the year," said Vicky Redwood from Capital Economics.
"Overall it's nice to have some good news for a change. Sadly we're unlikely to get much more," she added
Howard Archer from Global Insight said: "The bad news is that this narrowing in the deficit was due to weakness in imports rather than strength in exports."
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Comments
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Well the last sentence says it all really, we're not exporting any more, we're just importing less.Cannon_Fodder wrote: »Howard Archer from Global Insight said: "The bad news is that this narrowing in the deficit was due to weakness in imports rather than strength in exports."
So how can that be a surprisingly upbeat picture of the economy?Freedom is not worth having if it does not include the freedom to make mistakes.0 -
The gap could have grown if a drop in exports had outpaced the drop in imports...0
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Cannon_Fodder wrote: »The gap could have grown if a drop in exports had outpaced the drop in imports...
Yes its great news as its another indicator that the UK manufacturing sector is doing damn well, when you compare it manufacturing's near cliff like fall in most of the world.0 -
Yes I see what you mean, I was more thinking of our purchases in the UK, that's obviously gone down, also corroborated with by the figures out showing a drop in non food sales.
But we are still selling a good amount to the rest of the world. So are we selling stuff the rest of the world can't live without, or are they just continuing to buy more stuff than we are? Or have we artificially been buying too much before?Freedom is not worth having if it does not include the freedom to make mistakes.0 -
With the pound having fallen, why is a decrease in the trade deficit 'unexpected?'Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0
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Sir_Humphrey wrote: »With the pound having fallen, why is a decrease in the trade deficit 'unexpected?'
Because of the 'J-Curve'. It takes a few months for a drop in the exchange rate to show up in increased exports.
My feeling is this is noise. That the deficit will get slightly larger and then improve.
Check out what happened after the UK was forced out of the ERM to get a feel for things.0 -
Because of the 'J-Curve'. It takes a few months for a drop in the exchange rate to show up in increased exports.
My feeling is this is noise. That the deficit will get slightly larger and then improve.
Check out what happened after the UK was forced out of the ERM to get a feel for things.
Cheers for the explanation.
But there was fall in Sterling in c.Nov 2007 before the second fall in Dec 2008. Did the earlier fall feed through? Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0 -
The UK's deficit on trade in goods with the rest of the world fell to an 18-month low in December
Wow...........can't wait for all that Hyper-Diaper Inflation stuff to scorch through the economy due to the falling pound (thats going up :eek: )!!!! :rotfl:'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
Sir_Humphrey wrote: »Cheers for the explanation. But there was fall in Sterling in c.Nov 2007 before the second fall in Dec 2008. Did the earlier fall feed through?
I think it's impossible to say.
That the J-curve exists I am sure of. How it interacts with micro factors is a nightmare to work out and certainly not something I'm going to attempt after a few glasses of wine at midnight!
My best guess is that it takes about 6 months for a drop in the FX rate to feed through to the trade balance and another couple of months for it to mostly complete the process.0 -
not something I'm going to attempt after a few glasses of wine at midnight!
You'll probably come up with far more accurate figures than the ONS ever manages to 'cobble' together !!!!!'In nature, there are neither rewards nor punishments - there are Consequences.'0
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