Services Surplus Narrower In February

The seasonally adjusted trade deficit narrowed significantly during February 2010. The deficit on trade in goods and services fell from £3.9bn in January to £2.1bn in February. Trade in goods was £6.2bn in February compared with £8.1bn in January but the surplus on trade in services was £4.1bn in February from £4.2bn in January.

Exports increased by 6.3% but imports fell 1.4%. The prices of exports went up 0.5% and imports went up 0.3% compared with January. Total exports in goods increased 9.5% or £1.8bn to £21.3bn. Total imports of goods fell to £27.5bn. The single biggest contributor to the change in exports was chemicals with an increase of £629m. Oil was the second biggest with exports increasing by £370m and imports increasing by £205m.

An analysis of trade with EU countries shows that the deficit on trade in goods with EU countries narrowed by £0.6bn to £2.8bn in February 2010 compared with a deficit of £3.4bn in January. EU exports increased to £11.5bn and imports to £14.4bn.

The biggest export commodity traded with the EU was oil which increased in value by £751m over the quarter to February. There were large increases in value in imports of cars (£274m), fuels other than oil (£438m), capital goods (£108m) and intermediate goods (£176m). Imports of chemicals fell £279m over the quarter.

More geographical analysis shows that within the G7 group of countries export trade with the US increased by £0.5bn and with Germany by £0.2bn between January and February 2010. Import trade increased with Norway by £0.3bn but decreased with South Africa by £0.2bn.

The change in the volume of exports excluding oil and erratics increased by 6.3% but the volume of imports fell by 1.4% between January and February 2010. At the commodity level the biggest changes were in basic materials where exports increased by 42.7% and chemicals which increased by 15.2%. Over the quarter the biggest changes were in the export of cars which increased by 10.9% and the import of semi-manufactured goods (other than chemicals) which increased by 10%.

Export prices rose by 0.5% in February and import prices by 0.3%. The terms of trade therefore increased. If the oil price effect is left out export prices rose by 0.7% and import prices by 0.5%. Over the quarter export prices rose by 1.6% and import prices by 1.2%. Again that means an increase in the terms of trade.

The surplus on trade in services narrowed to £4.1bn compared with £4.2bn in January. Exports fell by 1.4% to £13.1bn and imports by 7.7% to £8.9bn.