Friday, March 14, 2014
Puzzling export weakness
Posted by David Smith at 01:00 PM
Category: Thoughts and responses

One strong feature of business surveys, for both manufacturing and services, has been the strength of export orders. None of this strength is, however, reflected in the official export numbers, the trend in which remains as flat as a pancake.

There are some compositional factors in this - the widening of the overall trade deficit from 0.7 billion in December to 2.6 billion in January largely reflected erratic items such as aircraft - but you would expect the numbers to be stronger than this.

The UK motor industry, for example, is doing well and exports 80% of its production. The official figures would suggest that this success is offset by weakness elsewhere. The oil deficit widened to almost 1 billion in January, from less than 0.6bn in December.

There is a glacial improvement in Britain's trade position in the latest figures - in the three months to January export volumes rose by 1.2% while import volumes fell by 0.5%.

There also was better news on services. As the ONS says: "Exports of services for 2013 were revised upwards by 1.9 billion to 199.0 billion and imports of services were revised downwards by 1.6 billion to 117.0 billion. Therefore the overall surplus was revised up by 3.5 billion to stand at 82.0 billion." More here.

But there is a long way to go before net trade makes a more decisive contribution to growth. Fortunately there is better news on the domestic front, with construction outout rising by a seasonally adjusted 1.8% in January, as set out here.