Trade Deficit Narrows To £1bn

Britain's trade deficit on goods and services was estimated to have been £1bn in December 2013 according to the ONS. This compares with a deficit of £3.6bn in November 2013. There was a deficit on goods of £7.7bn but a surplus of £6.7bn on services.

In terms of imports and exports, imports fell by 3.8% and exports grew by 2.1%. The biggest exports were in oil, chemicals and aircraft. There were falls in the import of aircraft and ships. Exports increased by 1.9% to £25bn between November and December 2013 while imports have decreased by 4.7% to £32.8bn.

Exports to countries outside the EU have increased 9.3% since July 2013 and imports have decreased by 9.6%.

Deceleration In World Trade Expected

World trade expanded by 5% in 2011 but it was a sharp deceleration after the 13.8% rebound in 2010. Growth is expected to slow even more in 2012 to 3.7% below the 5.4% 20-year average according to the WTO. The slowdown was attributed to a number of shocks including the European sovereign debt crisis, Japanese tsunami and Thai floods hitting production in Japan and China.

Developed economies with export growth of 4.7% did better than expected but developing economies did worse than expected with an increase of 5.4% (developing economies include CIS and China). Developing economies were disproportionately affected by the Japanese earthquake and tsunami, the Thai floods and the disruption in oil supplies from Libya.

The rate of world output growth fell to 2.4% in 2011, down from 3.8% in 2010. The European sovereign debt crisis was the biggest problem along with the supply chain disruption from the natural disasters in Asia and the turmoil of the Arab Spring. Expansion was below the 3.8% 20-year average. The fastest growing economies in 2011 were China with 9.2% then the Middle East with 4.9%, CIS 4.6%, South and Central America 4.5%. The slowest included Japan with -0.5%, US with 1.7% and the EU with 1.5% growth.

Countries with the fastest growing trade volumes included India on 16.1% growth, China with 9.2% and the US with 7.2%. Africa had the biggest decline in exports with a decrease of 8.3%, Japan decreased by 0.5% and the Philippines exports declined 14.3%. China and India had the fastest growing imports with 9.7% and 6.6% respectively. Greece and Chinese Taipei had the most serious decline in imports with -20% and -3% respectively.

There were significant appreciation of the Japanese yen and the Swiss franc against the US dollar in 2011. The yen went up by 10% year-on-year and the franc by 17%. The Swiss National Bank had to intervene in currency markets to keep the value of the currency down against the euro. The IMF real exchange rates show the US dollar's depreciation was stronger in real effective terms at -4.9% and that the average appreciation of other currencies was overstated. The yen only appreciated 1.7%, the yuan (China) rose 2.7%, the Brazilian real stronger at 4.7% and the euro with a rise of 1.8% was quite small.

China was the world's biggest exporter with the USA second biggest, Germany third and Japan fourth. The USA was the world's biggest importer, China second, Germany third and Japan fourth. The Uk was the 11th biggest exporter after Belgium and the 6th biggest importer after France. The UK was second biggest exporter of commercial service after the US and the fourth biggest importer after the US, Germany and China.

Annual CPI Down To 2.8%

CPI annual inflation fell from 3% in April to 2.8% in May 2012 according to data from the ONS. It is the lowest annual rate since November 2009 (1.9%). The index is 122.8 in May 2012 based on 100 in 2005.

The downward pressures came from motor fuel and food and non-alcoholic beverages. Upward pressure came from air and sea transport.

RPI inflation in May stands at 3.1% from 3.5% in April. It is the lowest since December 2009. Downward pressure came from petrol and oil and food, upward pressure came from other travel costs (incl. air transport).

Global Food Prices Remain Fairly Stable In November

The FAO Food Price Index fell slightly again in November 2011 with the average at 215 compared with 216 in October. There has been a downward trend in global food prices since February 2011. The annual food price index increased sharply in 2011 to 229 from the 185.3 of the previous year. They are the highest since at least 1990. The overall food price index reflects increases in the price indices of the commodity groups that make up the index. The prices for sugar, oils, and cereals reported sharp increases. Food is a volatile sector for prices.

Trade Deficit Narrowed To £1.6bn In October

The seasonally adjusted trade in goods and services deficit was £1.6bn in October down from £4.3bn in September according to the ONS. It is the smallest deficit since April.

The deficit on trade in goods amounted to £7.6bn and the surplus on trade in services amounted £6bn. Exports rose to a record £26.5bn and imports fell from the record £34.6bn in September to £34.1bn in October. Both import and export prices fell in October by 0.6% and 0.4% respectively.

There was a £2.1bn increase in exports of goods to both EU (£13.9bn) and non-EU (£12.6bn) countries.

The biggest changes in key commodity value between September and October were in exports of chemicals (+£596m) and capital goods (+£327) and imports of oil (+£276m). Consumer goods other than cars had the biggest downward change (-£246).

Natural Resources And Environmental Accounts

The ONS recently published the UK's environmental accounts for 2011 and they are described as satellite accounts to the main national accounts. They provide information on a wide range of things to do with atmospheric emissions, natural resources such as lands cover, oil and gas reserves, forestry, trade in basic materials, physical flows and monetary accounts related to the industrial, commercial and domestic sectors.

The effects of our activity on the environment have been an important policy issue for the last 40-50 years. There is growing concern about the impact of economic activity on both the global and local environment and also recognition that economic growth and human welfare depend on the enviroment. Raw materials and energy for goods and services, the absorption of waste, basic life support roles and amenities such as landscape are all services provided by the environment.

Environmental accounts provide data on the impact of economic activity on the environment, resource use and the taxes and subsidies associted with them and are sepearated into three dimensions: natural resources, physical flows and monetary. Natural resources accounts include oil and gas reserves, land cover and forestry.

Proven oil reserves at the end of 2009 were 378m tonnes. There has been a transfer of 38m tonnes from probable to proven reserves. Maximum oil reserves (proven, probable and possible) decreased by 19m tonnes to 1,111m tonnes in 2009. There are estimated to be hundreds of millions of tonnes of undiscovered recoverable oil reserves. Oil and gas reserves were worth an estimated value of £182.4bn in 2009, down 1.9% since 2008.

Total land cover in Great Britain is 22.6m hectares. Various types of grassland are the habitats that have increased between 1998 and 2007. Changes have also taken place in woodlands which have increased, arable and horticulture, which have decreased and bracken broad habitat which has also decreased.

The total area covered by woodland was 3.1m hectares or 12.7% of UK land area and is the highest since records began. The woodland area at the end of 2010 is 2.5 times tha area covered in 1924 (when records began). The area of new planting and restocking in 2010-11 was 22,700 hectares. Broadleaved species important for the expansion of the area of native woodland was 82% of new planting but only 27% of restocking.

There was an 8.4% decrease in greenhouse gas emissions in 2009 compared with 2008 bringing the total down by 58.1m tonnes to 636m tonnes of CO2 equivalent.

Material productivity is used to assess progress towards sustainable development by dividing GDP by Domestic Material Consumption (DMC). The environmental accounts show that between 1990 and 2009 material productivity increrased and the trend indicates that material use is falling in relation to economic activity and supports evidence that suggests that economic growth has decoupled from material use since 1990. Some of the environmental impacts associated with consumption may have been transferred abroad because the level of imports has generally risen over that period.

Manufacturing Increases 5.8%

Production increased by 3.3% in October according to the index of production from the ONS. Manufacturing increased by 5.8%. The main contributors to the increase in the manufacturing index were an increase of 1.4% in machinery and equipment and 1.3% from basic metals and metal products. Capital goods increased by 8.4% and intermediate goods and energy by 1.2%. Mining and quarrying fell by 7.2%, oil and gas extraction alone by 8%. Electricity, gas and water supply increased by 0.7%. Consumer durables fell by 5.2% while non-durables increased by 4.3%.

Shop Price Inflation Down To 1.8%

Shop price inflation fell to 1.8% in May from 2% in April according to the Shop Price Index (SPI) from the British Retail Consortium (BRC). Food inflation rose to 2.2% from 2% but non-food inflation fell to 1.6% from 2% in April.

A BRC spokesman said that the fall in the SPI happened despite big rises in some costs. Clothes and electricals are cheaper than last year but the rises in the price of oil are putting pressure on transport costs. Prices are being held down as customers still lack the confidence to spend. Tinned and packet food were the main causes in the rises in food inflation as falls in commodity prices, for products like coffee and wheat, still in the system are being awaited.

Trade Deficit

The trade deficit in March was £3.7bn compared with £2.2bn in February. On a quarterly basis the trade deficit for the first quarter (Q1) was £9.7bn compared with £8.7bn for Q4 2009. The trade surplus in services was valued at £3.8bn the trade deficit in goods was £7.5bn in March 2010 compared with £4.1bn and £6.3bn respectively in February.

In terms of changes in commodity value in March oil exports increased by £198m and exports of intermediate goods by £133m, chemicals imports decreased by £314m in value. The value of imports of intermediate goods increased by £268m and cars by £211m. All categories reported an increase in the value of imports during March. The change in the value exports of oil for the quarter was an increase of £511m. The value of consumer goods exports increased £372m. Exports of cars decreased in value by £236m and chemicals by £206m.

Geographical analyses show that within the G7 exports to the US fell by £0.5bn and imports from Germany increased in value by £0.3bn. Imports from Norway fell by £0.2bn during March compared with February. There were no significant changes in exports or imports within the G7 during the quarter but imports from Switzerland increased by £1.1bn, from Norway by £0.6bn and China by £0.5bn.

The volume of exports fell by 1.8% but imports increased by 3.5% with imports of basic materials up 6.5% and exports up 9%. Imports of cars went up 14.9% but exports fell by 5.2% in March. Over the quarter imports of basic materials increased 12.5% but exports fell 0.5%, imports of semi-manufactured goods increased by 13.2% but exports fell by 1.2%. Exports of consumer goods increased by 7.9%.

There was an increase in the terms of trade in March as exports prices rose by 2.9% and import prices rose by 2.7%. Over the quarter the terms of trade increased because export prices rose by 2.7% and import prices rose by 2.4%.

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.

Fall In Production In November

Production was 6% lower year-on-year in November 2009. Mining and quarrying was 6.5% down on last year and oil and gas down 4.1%. Energy supplies fell 10.6% over the same period. These decreases were slightly offset by an increase in water supply output.

Production increased 0.4% between October and November 2009. Mining and quarrying output increased by 5.9%, oil and gas 7.2%. Energy output went up 3.5% on the month. The gas supply output helped offset decreases in electricity and water supply output.

Manufacturing output showed an annual decline of 5.4% in November. Machinery and equipment at 17.4% showed the biggest declines while basic metals and metal products decreased by 12.1%. The transport equipment industries showed the largest annual increases with output going up by 2.8% which also reported an increase of 3.5% month on month.