UK trade: Feb 2017

• The deficit on trade in goods and services widened to £3.7 billion in February 2017 from a revised deficit of £3.0 billion in January 2017, predominantly due to an increase in imports of erratic goods; excluding erratic goods, the trade deficit narrowed to £2.5 billion in February 2017 from a revised deficit of £3.0 billion in January 2017.

• In the 3 months to February 2017, the deficit on trade in goods and services narrowed to £8.5 billion, reflecting a higher increase in exports than imports, mainly due to increases in exports of machinery and transport equipment, oil and chemicals; the deficit on trade in goods excluding oil and erratic commodities widened in the 3 months to February, continuing the trend seen in the rolling 3-month period since August 2016.

• Trade prices continue to be influenced by recent sterling movements, with export and import prices falling between January and February 2017, coinciding with an increase in volumes.

• Since the last UK trade release, there have been upward revisions across both exports and imports of trade in services throughout the 4 quarters of 2016, and a downwards revision to exports of goods in January 2017; this is due to new and updated data sources.

We are undertaking a programme of improvements to UK trade statistics in line with the UK trade development plan that will also address anticipated future demands. We welcome feedback on this development plan.

Trade is measured through both imports and exports of goods and/or services. Data are supplied by over 30 sources; including several administrative sources, HM Revenue and Customs (HMRC) being the largest. The quality of the HMRC source data for trade in goods is high in terms of the timeliness, comprehensiveness and coverage.

For trade in services, data are less timely than trade in goods estimates, and are sourced mainly from survey data and a variety of administrative sources. The services data are processed quarterly, so monthly forecasts are made to provide a complete trade total. This means latest months are uncertain.

All trade values discussed in the bulletin are in current prices unless otherwise stated. The time series dataset also includes chained volume measures (series for which the effects of inflation have been removed), and these are indexed to form the volume series presented in the publication tables.

Trade statistics for any one month can be erratic. For that reason, we recommend comparing the latest 3 months against the preceding 3 months and the same 3 months of the previous year. However, we also recognise the importance to users of an early estimate of trade; therefore, we continue to produce a monthly estimate.

Oil and other “erratic” commodities can make a large contribution to trade in goods, but often mask the underlying trend in the export or import values due to their volatility. The “erratics” series includes ships, aircraft, precious stones, silver and non-monetary gold. Therefore, we also publish data exclusive of these commodities, which may provide a better guide to the emerging trade picture. We also provide a separate analysis of oil as it is subject to erratic price fluctuations and therefore volume data are provided in metric tonnes as well as value (£ million).

UK trade is part of the short-term economic indicators theme day, alongside the Index of Production (IoP) which also includes the proportion of turnover from exports, by industry. However, this is not always comparable with UK trade statistics, for a number of reasons. These include, but are not limited to different data sources, different concepts being measured, and a potential time lag between the sale reported in IoP and the export reported by UK Trade.

This release has a revisions period back to January 2017 for trade in goods and January 2016 for trade in services. This means that we have incorporated additional data for these periods. Revisions can be made for a variety of reasons, the most common include:

• late responses to surveys and administrative sources, or changes to original returns

• forecasts being replaced by actual data

• revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually

This revisions period is consistent with the National Accounts revisions policy.

Due to a series of errors during 2014, the UK Statistics Authority suspended the National Statistics designation of UK trade on 14 November 2014. The Authority's reassessment of UK trade against the Code of Practice for Official Statistics has been completed. We have now responded to all of the specific requirements of the reassessment of UK Trade and are in the final stages of providing evidence to the Authority. We have invested more resource into improving and developing the UK trade statistics, which is supported by the UK Statistics Authority. While developing, and delivering against, our development plan, we will continue to work with the Assessment Team to regain National Statistics status for UK trade statistics.

The UK’s total trade deficit (goods and services) widened by £0.7 billion between January 2017 and February 2017 to £3.7 billion, this reflects a decrease in exports, and an increase in imports.

Total exports decreased in the month by £0.4 billion, the main contributor of this was a decrease in exports of trade in services of £0.3 billion. Total trade imports over the same period increased by £0.3 billion, this was due to an increase in imports of goods from the EU (£0.6 billion). However, this was partially offset by a decrease in imports of goods from non-EU countries (£0.2 billion) and a decrease in imports of services (£0.1 billion).

Between the 3 months to November 2016 and the 3 months to February 2017, the total trade deficit (goods and services) narrowed by £0.3 billion to £8.5 billion. The narrowing of the deficit reflected a greater rise in exports (3.1%) than the rise in imports (2.7%) over the period. This was mainly due to increases in exports of machinery and transport equipment, oil and chemicals.

Between the 3 months to November 2016 and the 3 months to February 2017, the total trade deficit excluding erratic commodities (ships, aircraft, precious stones, silver and non-monetary gold) narrowed by £0.5 billion to £8.7 billion. This narrowing of the deficit was due to a greater rise in exports (3.4%) than the rise in imports (2.8%) over the period.

There has been a steady increase of both exports and imports during 2016, with an overall increase of 14.2% and 14.1% respectively since the 3 months to February 2016. This has led to a narrowing of the trade deficit of goods and services (excluding erratics) in the rolling 3-month series since November 2016.

The 3-month on 3-month increase to the surplus on trade in services contributed to the narrowing of the total trade (excluding erratic goods) deficit. The monthly services data is forecast for January and February 2017, therefore subject to revisions when data become available.

In the 3 months to February 2017 trade in goods excluding oil and erratics shows a widening of the deficit by £0.8 billion to £33.6 billion, despite exports increasing more than imports, 3.8% and 3.3% respectively. This continues the trend seen in the rolling 3-month period since August 2016.

In 2016, the top three commodities traded by the UK were mechanical machinery, cars, and electrical machinery. Combined, their values account for 32% of all UK exports in 2016, and 30% of all UK imports¹.

Monthly growth rates can be volatile, but between the 3 months to November 2016 and the 3 months to February 2017 exports values of these three commodities increased (in current prices), with exports of mechanical machinery increasing to a record high £11.0 billion. Exports of cars also hit a record high value of £8.4 billion in the 3 months to February 2017, with 60% exported to non-EU countries. The Society of Motor Manufacturers and Traders (SMMT) reported a large increase in exports over the past year.

Imports of mechanical and electrical machinery increased between the 3 months to November 2016 and the 3 months to February 2017, contributing £1.0 billion and £0.5 billion, respectively, to the overall £4.3 billion growth in imports of goods over the same period.

The export of finished manufactures² accounted for 53% of exports in the 3 months to February 2017, and increased by 3.9% between the 3 months to November 2016 and the 3 months to February 2017. The largest contribution to growth was from capital goods, aircraft, and cars.

The import of finished manufactures accounted for 53% of imports in the 3 months to February 2017, and increased by 1.3% between the 3 months to November 2016 and the 3 months to February 2017. The largest contribution to growth was from intermediate goods and capital goods, partially offset by a fall in imports of ships.

Notes for: What are the top commodities exported and imported by the UK?

1. See reference table 15.

2. SITC 7&8.

Trade prices continue to be influenced by recent sterling movements, with depreciation in the second half of 2016 coinciding with upward pressure on export and import prices.

Between January 2017 and February 2017, export prices decreased by 0.5% and import prices decreased by 0.9%, with the value of sterling increasing by 0.8% in February 2017 compared with the January 2017 average. However, it remains 10.4% lower when compared with February 2016.

The decreases in export and import prices on the month is seen in both EU and non-EU countries. The volume of exports to and imports from the EU increased between January and February 2017, whereas volumes of both exports and imports between the UK and non-EU counties have decreased over the same period. The monthly change in the volume of exports and imports, broken down by commodity group, is shown in Table 2.

Between January and February 2017 the volume of exports of goods increased by 0.8%. The growth in export volumes in the latter part of 2016 may be a consequence of the fall in the value of sterling, making UK exports more competitive. However, volumes of imports have also increased in the same period, and therefore we are not yet seeing a notable narrowing of the trade deficit attributable to the sterling depreciation.

Since the last UK trade release, there have been upward revisions across both exports and imports of trade in services throughout the 4 quarters of 2016. The largest of the revisions was in Quarter 4 (October to December) 2016 with both exports and imports being revised upwards of £2.2 billion to £64.9 billion and £2.0 billion to £38.1 billion, respectively. The main contributors to the upwards revision in exports were other business services (£1.2 billion) and travel services (£0.5 billion). Whilst other business services (£0.7 billion), transport services (£0.6 billion) and telecommunication, computer and information services (£0.3 billion) were the main contributors to the revision to imports.

The revisions to services across this period are predominately due to better quality data becoming available as survey response increased.

Trade in goods had a revision period back to January 2017. The largest revision was to exports, with a downward revision of £1.3 billion in January 2017. This was mainly due to a revision to the exports of erratic commodities (down by £1.0 billion).

Supplementary quarterly data analysed by product according to the UK trade in goods by classification of product by activity (CPA 2008) are also available.

The complete run of data in the tables of this statistical bulletin are also available to view and download in other electronic formats free of charge using our time series data website service. You can download the complete statistical bulletin in a choice of formats, or view and download your own selection of individual series.

Data are available by commodity and partner country separately, but not commodity by partner country. However, one of our objectives in the UK trade development plan is to produce these breakdowns in the future. Commodity by country breakdowns are available via HM Revenue and Customs, but on an Overseas Trade Statistics (OTS) basis only. These aggregate estimates will differ slightly from those that are published by us on a Balance of payments (BoP) basis, as the two sets of data are compiled using different concepts.

We now publish the proportion of sales that are exports in the manufacturing industries as an Excel table to accompany the Index of Production release. The proportion of export sales has been published for industries collected by the Monthly Business Survey where the value of exports are reported as well as the total turnover. These are non-seasonally adjusted series.

On 28 October 2016, we published an article containing information on trade – Why has the value of the pound been falling and what could this mean for people in the UK?

Additional statistical data and analyses for UK trade statistics that have not been included in our standard publications are available on our website.

Trade is measured through both imports and exports of goods and/or services. Data are supplied by over 30 sources including several administrative sources, HM Revenue and Customs (HMRC) being the largest. We have now published an assessment of administrative data sources for ONS trade statistics in accordance with the UK Statistics Authority Quality Assurance of Administrative Data (QAAD) toolkit.

This monthly release contains tables showing the total value of trade in goods together with index numbers of volume and price. Figures are analysed by broad commodity group (values and indices) and according to geographical area (values only). In addition, the UK trade statistical bulletin also includes early monthly estimates of the value of trade in services.

Further qualitative data and information can be found in the attached reference tables. This includes data on:

• response rates

• revision triangles

Detailed methodological notes are published in the UK Balance of Payments, The Pink Book 2016.

The UK trade methodology web pages can now be found on our website. These have been developed to provide detailed information about the methods used to produce UK trade statistics.

The UK trade Quality and Methodology Information document contains important information on:

• the strengths and limitations of the data and how it compares with related data

• uses and users of the data

• how the output was created

• the quality of the output including the accuracy of the data