UK trade: July 2016

UK trade shows import and export activity and is a main contributor to the overall economic growth of the UK. This is the first release of UK trade covering a complete calendar month of data post EU referendum.

All data are shown on a seasonally adjusted, balance of payments basis, at current prices unless otherwise stated.

The UK’s deficit on trade in goods and services was estimated to have been £4.5 billion in July 2016, a narrowing of £1.1 billion from June 2016. Exports increased by £0.8 billion and imports decreased by £0.3 billion.

The deficit on trade in goods was £11.8 billion in July 2016, narrowing by £1.2 billion from June 2016. This narrowing reflected an increase in exports of £0.8 billion to £24.8 billion and a decrease in imports of £0.3 billion to £36.6 billion.

Between the 3 months to April 2016 and the 3 months to July 2016, the total trade deficit for goods and services widened by £5.1 billion to £14.0 billion.

Between the 3 months to April 2016 and the 3 months to July 2016, the deficit on trade in goods widened by £5.0 billion to a deficit of £36.0 billion. Exports decreased by £1.6 billion (2.2%) and imports increased by £3.3 billion (3.2%).

Between the 3 months to April 2016 and the 3 months to July 2016, the UK’s trade in goods deficit with the EU widened by £0.1 billion to £23.6 billion. Between the 3 months to April 2016 and the 3 months to July 2016, the UK’s trade in goods deficit with countries outside the EU widened by £4.8 billion to £12.5 billion, attributed to a decrease in exports (6.8%) and an increase in imports (4.5%).

Between the 3 months to April 2016 and the 3 months to July 2016, the trade in services surplus narrowed by £0.1 billion to £22.0 billion, as exports decreased by £0.5 billion and imports decreased by £0.4 billion.

As part of the ongoing development of UK trade statistics, we have introduced improved seasonal adjustment in this release which has led to revisions to trade in goods from 2015 onwards. Updated figures from HM Revenue and Customs from the beginning of 2015 have also been included in this release in line with the revisions policy.

Short guide to UK trade

UK trade shows the extent of import and export activity and is an important contributor to the overall economic growth of the UK. 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.

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.

This bulletin focuses on trade in goods as it is easier to quantify and measure due to the coverage and comprehensiveness of the administrative data sources available. Trade in services is more difficult to measure, and source data are provided mainly on a quarterly or annual basis, principally from International Trade in Services survey (ITIS). Monthly estimates are derived using this quarterly data; therefore, the data are less robust on a monthly basis compared with goods.

As more information becomes available on trade in services this bulletin will focus on the values, volumes and geographic breakdown on a 3 month cycle described below:

Our website

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. Any recent user requested trade data are included on our website.

Understanding UK trade

We make every effort to provide informative commentary on the data in this release. Where possible, the commentary draws on evidence from other sources of information to help explain possible reasons behind the observed changes. However, in some instances it can prove difficult to draw out detailed reasons for movements; consequently, it is not possible for all data movements to be fully explained.

Trade statistics for any 1 month can be volatile. For that reason, it is recommended to compare the latest 3 months against the preceding 3 months and the same 3 months of the previous year.

When examining the trade in goods data, oil and “erratics” (which are high value, low volume products) are removed from some analysis as they can make a large contribution to trade in goods as a whole. Therefore we publish data inclusive and exclusive of these categories. We also provide a separate analysis of oil because it is subject to erratic price fluctuations and therefore volume data are provided in metric tonnes as well as value (£ billion).

Strengths and weaknesses of the data

Strengths

Quality of trade in goods data

The quality of the source data for trade in goods is high in terms of the timeliness, comprehensiveness and coverage, and this level of quality compares well internationally. The data are used across government, business and academia and feed into a number of other outputs and publications, including gross domestic product and balance of payments. The Bank of England uses the total figures to make policy decisions, whereas government departments such as the Foreign and Commonwealth Office are interested in the individual country detail.

We have frequent communication with our suppliers to discuss quality, including regular meetings, telephone conversations and email correspondence. Service level agreements are in place to define the level of quality expected in the data received and these are reviewed annually. Data suppliers have their own internal quality assurance processes to meet the quality standards outlined in the service level agreements and we work closely with them to understand these. Suppliers are required to advise us of any changes to the collection or processing of the data to ensure our expectations are still met.

When data are received by the trade team we conduct our own initial quality assurance. Further quality analysis is then conducted at several stages of processing; this is detailed in a process map and quality assurance plan. If there are any quality concerns we work closely with the supplier to address these.

We have regular discussions with users on the quality of our data and provide comprehensive explanations of the terms, methodology and processes we use. Eurostat is an important customer influence and helps improve the quality of our data through task force meetings and by producing quality guidelines.

Timeliness of publications

The UK trade publication is very timely (generally 40 days after the period to which it refers), helping to inform policy and to assess UK economic performance.

Weaknesses

Quality and timeliness of trade in services data

Where trade in goods has 1 main data supplier, there are a large number of suppliers of trade in services data. Additionally, a number are voluntary, so it can be difficult to establish and maintain the same quality assurance processes and relationships with these businesses or suppliers.

Due to the collection methods and complexities of quantifying trade in services, data are less timely than trade in goods estimates. The data are processed quarterly, so monthly forecasts are made to provide a complete trade total.

Monthly volatility

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.

UK trade National Statistics suspension

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 are committed to meeting the requirements and regaining National Statistics status for UK trade as soon as possible and will keep users informed of progress.

One of the recommendations of the reassessment was to consult with users on the use of UK trade statistics. The results of our user engagement survey can be found on our website.

To provide feedback on the bulletin please contact us via email at trade@ons.gov.uk.

The trade development plan was published for consultation in March 2016. We are grateful for the responses received. As detailed elsewhere in this release, we are undertaking and applying ongoing improvements to UK Trade statistics in line with this development plan and also to address recent issues and anticipated future demands.

UK trade re-assessment update

We have now addressed some of the requirements of the re-assessment of UK trade and are in the final stages of providing evidence on the remaining requirements. In doing so, we are working with the Assessment Team to evaluate whether any additional evidence will be required as a result of the independent review of UK economic statistics led by Professor Sir Charles Bean.

This month, improvements to seasonal adjustment have been implemented which reduce the volatility in the implied deflator.

Due to user demand we have included a UK trade EU section which includes an EU exports, imports and percentages of world total table. Estimates for 2015 in Table 2 included in this section will be updated after the publication of UK economic accounts on 30 September 2016.

Definitions and explanations

A glossary of terms is published in the UK trade glossary and the UK Balance of Payments, The Pink Book 2016.

Nonmonetary gold

According to internationally agreed standards, nonmonetary gold held in allocated accounts is recorded as a good; therefore, gold of this type which is being stored as a financial asset is recognised under trade in goods when ownership changes between a resident and non-resident.

Data are collected by the Bank of England from the London Bullion Market on holdings of nonmonetary gold. Working alongside the Bank of England and the London Bullion Market Association, we have implemented a method for smoothing the source data, effectively minimising volatility whilst enabling the underlying trend of the gold market to be reflected in the trade balance.

Estimates for trade in nonmonetary gold still remain volatile compared with other commodities and, as such, it is classified under erratics.

Use of the data

UK trade is a main economic indicator due to the importance of international trade to the UK economy. It is also a very timely statistic, providing an early indicator of what is happening more generally in the economy.

In addition, it is a major component of 2 other main economic indicators: UK gross domestic product (GDP) and the UK balance of payments. This means that there is a threefold potential for UK trade statistics to inform the government’s view of the UK economy, as well as the views of others, such as economists, city analysts, academics, the media and international organisations.

Notes on tables

Rounding:
The sum of constituent items in tables does not always agree exactly with the totals shown due to rounding.

Symbols:
.. Not applicable
- Nil or less than half the final digit shown

Monthly analysis

The deficit on trade in goods and services in July 2016 was £4.5 billion, compared with a deficit of £5.6 billion in June 2016. The narrowing of the deficit largely reflects an increase in exports between June 2016 and July 2016.

Between June 2016 and July 2016, total exports (goods and services) increased by £0.8 billion (1.9%) to £43.8 billion; this increase reflected a £0.8 billion (3.4%) increase in the export of goods. Total imports (goods and services) decreased by £0.3 billion (0.5%) to £48.3 billion over the same period, reflecting a £0.3 billion (0.9%) fall in imports of goods.

The deficit on trade in goods was £11.8 billion in July 2016, narrowing by £1.2 billion from June 2016. This narrowing mainly reflects an increase in exports. Exports of ships increased by £0.5 billion and exports of fuels increased by £0.5 billion: specifically oil which increased by £0.4 billion. There were smaller increases in exports of food, beverages and tobacco (combined), miscellaneous manufactures and machinery of £0.1 billion each. These increases were offset by a £0.5 billion decrease in the exports of aircraft. Over the same period imports of goods fell; with a decrease in the imports of cars of £0.3 billion.

Between June 2016 and July 2016, exports of goods to EU countries increased by £1.0 billion (9.1%) to £12.5 billion, mainly reflecting an increase in exports of oil (£0.5 billion) and miscellaneous manufactures (£0.3 billion), of which jewellery increased by £0.2. billion to a record high. Imports of goods from EU countries increased by £0.4 billion to £20.1 billion in July 2016; there were increases in oil, chemicals, material manufactures and miscellaneous manufactures (£0.1 billion each). These rises were offset by a fall in imports of cars and aircraft from the EU (£0.2 billion each).

Between June 2016 and July 2016, exports of goods to countries outside the EU decreased by £0.2 billion, reflecting a fall in aircraft (£0.6 billion). Imports of goods from countries outside the EU decreased by £0.7 billion, reflecting falls in unspecified goods (£0.4 billion) and oil (£0.2 billion). These falls were offset by an increase in imports of aircraft (£0.4 billion).

3-monthly analysis

Between the 3 months to April 2016 and the 3 months to July 2016, the total trade deficit (goods and services) widened by £5.1 billion to £14.1 billion, the widest deficit since the 3 months to December 2013. The trade position reflects exports minus imports; the widening of the deficit reflected both a fall in exports (1.7%) and a rise in imports (2.1%). Imports of goods and services reached a record high of £143.6 billion in the 3 months to July 2016.

The deficit on trade in goods widened by £5.0 billion to reach a deficit of £36.0 billion between the 3 months to April 2016 and the 3 months to July 2016. Exports of goods decreased by £1.6 billion (2.2%), to £72.6 billion. This decrease was mainly attributed to a £2.8 billion fall in unspecified goods (of which non-monetary gold is the key component) and a £0.7 billion decrease in chemicals; this was partially offset by a £0.8 billion increases in exports of cars which reached a record high level of £7.6 billion. Imports of goods increased by £3.3 billion (3.2%) as imports of unspecified goods increased by £3.9 billion; with smaller increases in imports of oil (£0.8 billion) and aircraft (£0.4 billion). These increases were partially offset by a fall in imports of miscellaneous manufactures (£1.1 billion) and machinery and transport equipment (£1.0 billion).

Between the 3 months to April 2016 and the 3 months to July 2016, exports of goods to EU countries increased by £1.0 billion to £35.7 billion. This was due to exports of fuels which increased £0.3 billion and miscellaneous manufactures, which rose £0.3 billion (of which jewellery increased £0.1 billion to a record high). Imports from the EU increased £1.2 billion to a record high of £59.3 billion in the 3 months to July 2016. This increase reflected rises in the majority of commodities, most notably chemicals which increased £0.5 billion. The exception was cars, where imports from the EU decreased £0.2 billion. The overall trade in goods deficit with the EU widened by £0.1 billion.

In contrast, there was a fall in exports to countries outside the EU of £2.7 billion in the 3 months to July 2016 to £36.9 billion; however, trade with non-EU countries was impacted by large movements in nonmonetary gold, which is volatile and included within erratics.

In the 3 months to July 2016 exports of services fell £0.5 billion and imports of services fell by £0.4 billion, resulting in a narrowing of the trade in services surplus of £0.1 billion to £22.0 billion.

Following the EU referendum, the value of sterling fell sharply against a basket of currencies at the end of June and into July. In July 2016, the sterling Exchange Rate Index (ERI) was 6.6% lower compared with the average level in June, and 15.0% lower compared with July 2015.

The general consensus among economic commentators is that the recent depreciation should boost export and manufacturing competitiveness, and will potentially lead to higher long run volume growth. Previous analysis by ONS looking at the depreciation of sterling during the economic downturn can be found on our website.

Economic theory states that changes in the value of a country’s currency can, all else equal, make export prices more competitive. For example, if the UK chooses to import everything in dollars and export everything in sterling, a depreciation in sterling would cause UK exports to become more competitive and UK imports to be more expensive. Therefore it would be expected that export prices would fall and import prices would rise.

But in general, a close long-run relationship between export and import prices is to be expected, as other factors such as raw material and labour prices are also significant prices drivers and tend to move in the same direction over time.

Figures 2 and 3 show the relationship between export prices and import prices for the UK and the US since 1998. From this, it is clear that export prices and import prices follow broadly similar trends in both countries. This also occured during the 2008 to 2009 economic downturn, where the performance of both currencies deteriorated, which is contrary to the theory these prices should move in opposite directions during a large change in currency.

However, there are a number of reasons why there may not be a straightforward inverse relationship over this period. Firstly, large movements in sterling have often coincided with large changes in commodity prices – the latter of which affects the cost of foreign and domestically produced goods in the same way. In addition, a high proportion of inputs for a range of UK products are imported (see previous analysis in the Economic Review: May 2016), therefore a rise in the price of imports can raise domestic firms’ costs, which may in turn lead to upward pressure on export prices.

Many domestic firms may also agree to export or import goods at a fixed price in the importer’s currency, to maintain client relationships and consistency of orders. If a UK firm agrees to do this, the price of the trade (export) on a sterling basis would rise as the currency depreciates.

Figure 4 shows the correlation between export prices and import prices for the UK and a number of other countries. This shows that all countries apart from Japan have a positive correlation between export prices and import prices, with the UK and US showing the strongest correlation.

While true of the UK and the US, other countries have varying correlations. Germany also has a strong positive correlation of 0.92, while France and Canada show less, albeit strong, positive correlation at 0.7 and 0.63 respectively. While Japan’s correlation is negative, there is only a relatively small correlation at minus 0.18.

The different correlations may be partially explained by a country’s trading partners. For example, much of France and Germany’s trade remains within the EU, where there is a common currency and hence lower exchange rate exposure. By contrast, UK major trading partners include the US and the EU, where there is not a common currency.

UK export and import price indices for July 2016 show a similar story. Export prices grew by 3.6%, while import prices grew by 3.2% compared with June 2016. This shows a continuing correlation between export and import prices, despite the depreciation in sterling following the EU referendum. As discussed, this could be attributed to the rise in import prices raising domestic firms’ costs, which then provides upward pressure on export prices. However as monthly data can often be volatile, it is unclear whether this is an impact of the depreciation of sterling and it is necessary to look at the trend over the next few months to get a clearer picture.

Longer term perspective - UK trade with the EU

In 2015, exports of goods and services to the EU accounted for 44.0% of the total exports. The proportion is closer to half for exports of goods (47.0%) and just under two-fifths (39.0%) for trade in services. The share of exports has fallen by more than 10 percentage points over the last 15 years.

Rotterdam effect

In this context users should note the “Rotterdam effect”, where goods initially exported to 1 country are subsequently re-exported to another country. This might overstate the share of exports going to a particular country, in this case the Netherlands, and therefore overstate the share of exports going to the EU.

It is not possible to quantify the Rotterdam effect precisely, but an article exploring this issue was published in 2015. The article used 2013 data to estimate the effect, and made an assumption that 50% of all goods exports to the Netherlands were re-exported to non-EU countries. Using this assumption, the Rotterdam effect would account for around 4 percentage points of the UK’s exports of goods. These effects were calculated to illustrate the possible size of the Rotterdam effect. The Rotterdam effect applies only to trade in goods. The 4 percentage points estimate therefore applies to the share of the exports of goods only.

When considering the total exports of goods and services to the EU – the 44.0% figure quoted in Table 2 – the Rotterdam effect is estimated at around 2 percentage points. It is also important to note that the Rotterdam effect could also affect the UK’s imports. However, these estimates were calculated to illustrate the possible size of the Rotterdam effect and do not imply that a different data series should be produced or used.

Monthly analysis

In July 2016, the UK’s deficit on trade in goods was £11.8 billion, narrowing by £1.2 billion from June 2016. Exports increased by £0.8 billion (3.4%) to £24.8 billion in July 2016, from £24.0 billion in June 2016.

In detail:

• oil rose by £0.4 billion

• machinery and transport equipment rose by £0.1 billion

• crude materials rose by £0.1 billion

• material manufactures rose by £0.1 billion

• food, beverages and tobacco rose by £0.1 billion

• miscellaneous manufactures rose by £0.1 billion

Imports decreased by £0.3 billion (0.9%) to £36.6 billion in July 2016, from £36.9 billion in June 2016.

In detail:

• unspecified goods fell by £0.4 billion

• oil fell by £0.1 billion

• road vehicles fell by £0.1 billion

• other transport equipment rose by £0.3 billion

3-monthly Analysis

In the 3 months to July 2016, the deficit on trade in goods was £36.0 billion, widening by £5.0 billion from the 3 months to April 2016.

Exports decreased by £1.6 billion (2.2 %) to £72.6 billion in the 3 months to July 2016, compared with £74.2 billion in the 3 months to April 2016.

In detail:

• unspecified goods fell by £2.8 billion

• chemicals fell by £0.7 billion

• machinery and transport equipment rose by £1.7 billion

Imports increased by £3.3 billion (3.2 %) to £108.6 billion in the 3 months to July 2016, compared with £105.3 billion in the 3 months to April 2016.

In detail:

• unspecified goods rose by £3.9 billion

• oil rose by £0.8 billion

• miscellaneous manufactures fell by £1.1 billion

At the main commodity level, the data are shown in Table 3.

Where to find data about UK trade in goods

The value of trade in goods figures are available in Table 1 and commodity figures are available in Tables 8, 9 and 10 of the UK trade dataset.

In July 2016, the deficit on trade in goods with EU countries narrowed by £0.6 billion to £7.6 billion. The deficit on trade in goods with non-EU countries narrowed by £0.5 billion to £4.2 billion (Figure 7).

EU analysis

Between June 2016 and July 2016, exports to the EU increased by £1.0 billion (9.1%) to £12.5 billion. This was attributed to an increase in exports to the Netherlands and Germany of £0.3 billion each and to Belgium and Luxembourg (combined), Republic of Ireland, Spain and France of £0.1 billion each.

Between June 2016 and July 2016, imports from the EU increased by £0.4 billion (2.0%) to £20.1 billion. This was attributed to increases in imports from the Netherlands, Belgium and Luxembourg (combined), and Spain of £0.2 billion each, offset by a decrease in imports from France of £0.2 billion.

Between the 3 months to April 2016 and the 3 months to July 2016, exports to the EU increased by £1.0 billion (3.0%) to £35.7 billion. This was attributed to an increase in exports to the Republic of Ireland of £0.4 billion and to Finland, Italy, Netherlands, Belgium and Luxembourg (combined), France, Denmark and Poland of £0.1 billion each.

Between the 3 months to April 2016 and the 3 months to July 2016, imports from the EU increased by £1.2 billion (2.1%) to £59.3 billion. This was attributed to an increase in imports from Germany and Spain of £0.3 billion each and to Netherlands, France, and Belgium and Luxembourg (combined) of £0.2 billion each.

At the commodity level, the data are shown in Table 4.

Non-EU analysis

Between June 2016 and July 2016, exports to non-EU countries decreased by £0.2 to £12.3 billion. This was attributed to a decrease in exports to USA with Puerto Rico of £0.3 billion.

Between June 2016 and July 2016, imports from non-EU countries decreased by £0.7 billion (minus 4.3%) to £16.5 billion. This was mainly attributed to a decrease in imports from Norway of £0.5 billion.

Between the 3 months to April 2016 and the 3 months to July 2016, exports to non-EU countries decreased by £2.7 billion (6.8%) to £36.9 billion. This was attributed to decreases in exports to Saudi Arabia of £1.3 billion, China of £0.9 billion and India and the USA of £0.3 billion each.

Between the 3 months to April 2016 and the 3 months to July 2016, imports from non-EU countries increased by £2.1 billion (4.5%) to £49.4 billion. This was attributed to increases in imports from China of £1.4 billion and South Africa of £0.7 billion.

At the commodity level, the data are shown in Table 5.

Where to find data about UK trade in goods – analysis by area

Trade in goods by area figures are available in Table 2 and value of trade in goods with selected EU and non-EU trading partner figures are available in Tables 11 and 12 of the UK trade dataset.

Monthly analysis

The USA was the UK’s top export partner with exports of £3.7 billion in July 2016, a decrease of £0.3 billion when compared with June 2016.

Germany was the UK’s top import partner with imports of £5.3 billion in July 2016, a decrease of £29 million when compared with June 2016.

3-monthly Analysis

In the 3 months to July 2016, the USA was the UK’s top export partner with exports of £11.3 billion, decreasing by £0.3 billion when compared with the 3 months to April 2016.

The USA was the UK’s top import partner with imports of £15.9 billion, increasing by £0.3 billion when compared with the 3 months to April 2016.

Where to find data about UK trade in goods – geographical analysis

Trade in goods by area figures are available in Table 2 and value of trade in goods with selected EU and non-EU trading partner figures are available in Tables 11 and 12 of the UK trade dataset.

Between June 2016 and July 2016, the volume of exports decreased by 0.2%.

Between June 2016 and July 2016, the volume of imports decreased by 3.8%.

Between the 3 months to April 2016 and the 3 months to July 2016, the volume of exports decreased by 6.4%.

Between the 3 months to April 2016 and the 3 months to July 2016, the volume of imports increased by 1.6%.

At the commodity level, the data are shown in Table 8.

In July 2016, compared with June 2016, export prices increased by 3.6% and import prices increased by 3.2%. Excluding the oil price effect, export prices increased by 3.6% and import prices increased by 3.2%.

Between the 3 months to April 2016 and the 3 months to July 2016, export prices increased by 3.5% and import prices increased by 2.5%. Excluding the oil price effect, export prices increased by 2.0% and import prices increased by 1.0%.

As Producer Prices are reported in the currency in which the transaction takes place, a proportion of prices are converted to sterling using an average exchange rate. In July, sterling depreciated, this had an immediate pass through to both export and import prices.

In July 2016, the balance of trade in oil was in deficit by £0.6 billion, a narrowing of £0.5 billion from June 2016. Oil exports increased by £0.4 billion to £1.7 billion and oil imports decreased by £0.1 billion to £2.3 billion.

In the 3 months to July 2016, the balance on trade in oil was in deficit by £1.9 billion, widening by £0.8 billion from the 3 months to April 2016. Oil exports increased by £76 million to £4.4 billion and oil imports increased by £0.8 billion to £6.3 billion.

Where to find data about trade in oil

The trade in oil figures are available in Tables 1 and 7 of the UK trade dataset.

Information on trade in services is mainly obtained from quarterly surveys, in some cases underpinned by larger annual surveys. This means that the latest months are uncertain.

Between June 2016 and July 2016, the estimated surplus on trade in services fell by £0.1 billion in July 2016 to £7.3 billion. Exports were estimated to have been £19.0 billion and imports £11.7 billion.

In the 3 months to July 2016, the surplus on trade in services was £22.0 billion: financial services being the largest contributor to this with a surplus of £9.8 billion.

Analysis by volume, chained volume measure (CVM)

Between Quarter 1 (January to March) 2016 and Quarter 2 (April to June) 2016, exports of services decreased by £0.6 billion to £57.3 billion. The main contributors to this decrease were air transport services (£0.7 billion), financial services (£0.6 billion) and manufacturing and maintenance services (£0.5 billion). This decrease was offset by increases in other business services (£0.6 billion), personal, cultural and recreational services (£0.3 billion) and government services (£0.3 billion). For the same period, imports of services decreased by £0.7 billion to £34.7 billion. The main contributors to this decrease were other business services (£0.9 billion), postal and courier services (£0.2 billion), intellectual property services (£0.2 billion), sea transport services (£0.2 billion) and construction services (£0.2 billion). This decrease was offset by increases in travel services (£0.8 billion) and telecommunication, computer and information services (£0.2 billion).

Between Quarter 2 2015 and Quarter 2 2016, exports of services increased by £5.3 billion. Within exports, the largest increases were seen in other business services (£2.2 billion), insurance services (£1.1 billion), telecommunication, computer and information services (£1.0 billion) and intellectual property services (£0.8 billion). For the same period, imports decreased by £0.4 billion, reflecting a decrease in other business services (£0.4 billion).

Revisions

Between the June 2016 and July 2016 UK trade publication, the Quarter 2 (April to June) 2016 surplus for trade in services has been revised up by £0.2 billion, which reflects a downward revision of £0.6 billion in exports and a downwards revision of £0.7 billion in imports. The main contributors to the revision in exports were transport services (£0.9 billion) and other business services (£0.8 billion) , offset by upwards revisions in the export of telecommunication, computer and information services (£0.6 billion) and personal, cultural and recreation (£0.5 billion). The main contributors to the revision in imports were other business services (£0.5 billion) and transport services (£0.4 billion), offset by an upwards revision in the import of travel services (£0.3 billion).

Where to find data about trade in services

The trade in services figures are available in Table 1 continued of the UK trade dataset.

A quarterly breakdown of trade in services by selected countries can be found in the Quarter 1 (January to March) 2016 United Kingdom Economic Accounts.

More detail on trade in services by type of service and partner county can be found in the annual UK Balance of Payments, The Pink Book 2016.

Other regularly published UK trade releases

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 latest release on 14 June 2016 covered the period Quarter 1 (January to March) 2016 and the data are consistent with UK trade: May 2016. Following an internal review of our publications and a wider survey of users there is no longer a statistical bulletin associated with the release.

The data will be updated at the next publication on 14 September 2016 to be fully consistent with the UK Balance of Payments, The Pink Book 2016 and UK National Accounts, The Blue Book: 2016 datasets.

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 zipped formats, or view and download your own selections of individual series.

HM Revenue and Customs (HMRC) publish Overseas trade statistics (OTS) on the same day as we release the UK trade data each month. These aggregate estimates will differ slightly from those that are published by us as part of the Balance of Payments (BoP), as the 2 sets of data are compiled to different sets of rules. The BoP publication shows a high level picture of UK trade in goods, whereas the OTS publication shows a detailed picture of the UK’s trade in goods by commodity and partner country.

Recently published reports on UK trade topics

On 5 September 2016, we published a short story on UK trade and investment relationship with the USA. This is part of a series which began in June 2015: previous topics cover South America, China and Africa.

On 29 July 2016, we published the annual UK Balance of Payments, The Pink Book: 2016 which, as well as containing more detailed information on trade, provided an overview of the trade deficit in relation to the current account deficit.

We have published a methodology article estimating the value of service exports abroad from different parts of the UK. This work has been undertaken to meet user needs for sub-national estimates for exports of services. The article provides annual estimates for 2011 to 2014, including breakdowns by region, commodity and industry, which at this stage are considered experimental. We welcome feedback on the article and the proposed methodology.

The Economic Review: April 2016, published 6 May 2016, contains information on trade as a percentage of GDP.

The Economic Review: February 2016, published 3 February 2016, includes analysis of trade with EU and non-EU countries.

On 29 January 2016 annual International Trade in Services: 2014 survey results were published. This release gives information on the industry of the businesses engaged in trade in services.

Historic articles published on UK trade

In our Economic Review: September 2015 there is further commentary on UK export performance.

On 1 September 2015, we published an article on the economic performance of the UK’s motor vehicle manufacturing industry.

On 26 June 2015, we published a short story on the importance of EU to UK trade and investment.

On 6 February 2015, we published an article on the Rotterdam effect and its potential impact on the UK trade in goods estimates.

On 23 January 2015, we published a short story exploring the reasons behind the UK trade deficit.

Published user requested data and analysis

Additional statistical data and analyses for UK trade statistics that have not been included in our standard publications are available at the user requested data and analysis pages on our website.

Methodological articles

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

Revisions

In this release, the revision period for trade in services is January 2016 to June 2016 and trade in goods is January 2015 to June 2016, in-line with the National Accounts revision policy. As part of ongoing developments to UK trade statistics, we have introduced improved seasonal adjustment for 2015 onwards. Updated figures from HM Revenue and Customs from the beginning of 2015 have also been included in this release.

For 2015, exports of goods have been revised down by £1.6 billion to £283.3 billion and imports of goods revised down £1.5 billion to £409.7 billion. As a result, the overall trade in goods deficit for 2015 is £126.4 billion, revised from the previously published estimate of £126.3 billion, and the overall trade deficit is £38.7 billion for 2015.

Impact of revisions to the trade contribution to GDP

As well as revisions to headline exports and imports in current price there are revisions to trade volume estimates of which net trade (export less imports) feeds into the expenditure based estimate of gross domestic product (GDP).

Figure 15 shows the contribution of net trade in goods to GDP growth and expected revision, all else equal. The revisions do not alter the pattern of net trade contributions to GDP growth as net trade continues to switch between periods of both supporting GDP growth and periods of drag on GDP growth. The largest revision is in Quarter 2 (Apr to June) 2015, where trade in goods previously contributed 1.9 percentage points to GDP growth and has now been revised down to an estimated 1.5 percentage points.

While these improvements have caused revisions to quarterly growth rates for trade, due to the way GDP is calculated, these are unlikely to feed through significantly to headline GDP estimates.
For Quarter 2 2016, revisions to trade in goods indicate trade will have more of a drag than reported at the second estimate.

Note that trade in services estimates in volume terms presented in this UK trade release for quarter 2 are subject to further revision within the production of the Quarterly National Accounts which is normal practice.

Methodology changes

Change to the way HM Revenue and Customs trade in goods statistics are compiled

From June 2016 month of account, there has been a methodological change to the way HM Revenue and Customs compiles non-EU statistics.

Following a change in legislation, non-EU trade in goods statistics have moved from the general trade system of compilation to the special trade system. In brief, special trade records the physical movement of goods to and from the UK, but excludes goods that are placed into customs warehouse where duty and Value Added Tax (VAT) has not yet been paid.

This change has had minimal impact on our trade in goods statistics as we previously applied adjustments to remove those goods held in customs warehouse from our data; the only change we have made is the removal of these adjustments.

A full announcement on the Methodological change to UK Trade Statistics is available on the HM Revenue and Customs website.

Accuracy

Trade in goods figures for the most recent months are provisional and subject to revision in the light of:

• late trader data

• revisions to seasonal adjustment factors which are re-estimated every month

Trade in services estimates have been derived from a number of monthly and quarterly sources. For components where no monthly data are available, estimates have been derived on the basis of recent trends. The results should be used with appropriate caution, as they are likely to be less reliable than those for trade in goods.

Reliability

Revisions to data provide one indication of its reliability. Table 9 shows summary information on the size and direction of the revisions that have been made to the data covering a 5-year period. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. An asterisk (*) shows that the test is significant.

UK trade re-assessment

The UK Statistics Authority suspended the National Statistics designation of UK trade on 14 November 2014. The Authority's re-assessment of UK trade against the Code of Practice for Official Statistics has been completed.

One of the recommendations of the re-assessment was to consult with users on the use of UK trade statistics. The results of this user engagement survey can be found on our website.

UK trade re-assessment update

We have now addressed some of the requirements of the re-assessment of UK trade and are in the final stages of providing evidence on the remaining requirements. In doing so, we are working with the Assessment Team to evaluate whether any additional evidence will be required as a result of the Independent review of UK economic statistics, led by Professor Sir Charles Bean.

Trade development plan

The trade development plan was published for consultation in March 2016. We are grateful for the responses received. As detailed elsewhere in this release, we are undertaking and applying ongoing improvements to UK Trade statistics in line with this development plan and also to address recent issues and anticipated future demands.

EMU enlargement

As of 1 January 2015, Lithuania joined the European Monetary Union (EMU). Therefore the EMU totals in this UK trade release include Lithuania.

EMU coverage

The coverage of EMU countries was extended to cover Cyprus and Malta from October 2008, Slovakia from January 2009, Estonia from January 2011, Latvia from January 2014 and Lithuania from January 2015. Some EU and non-EU breakdowns of commodity data for chained volume measures which are available on request may be less reliable than the current price data. Please consult Katherine Kent on +44 (0)1633 455829 if you are considering using them.

Data have been combined for the US and Puerto Rico and for Dubai, Abu Dhabi and Sharjah (the United Arab Emirates) from January 2009 onwards. Estimates are separately available for the United States and Dubai up to the end of 2008 on request.

Erratics

Non-monetary gold is now included in the erratics series, along with ships, aircraft, precious stones and silver. In compliance with the BPM6 changes, non-monetary gold which is held as a store of wealth is now recorded within trade in goods.

Deflation

It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values.

Chain-linked indices (chained volume measures), which are indexed to form the volume series in this bulletin, differ from fixed base indices in that the growth from 1 year to the next is estimated by weighting the components using the contribution to value of trade in the immediately preceding year (effectively re-basing every year). This series of annually re-weighted annual growths is then “chain-linked” to produce a continuous series.

The implied price deflators, derived by comparing current price data to chained volume measures data are not the same as the price indices published in this statistical bulletin, because the former are current weighted while the latter are base (2013) weighted.

Changes in trade associated with Value Added Tax (VAT) missing trader intra-community (MTIC) fraud mean that comparisons of volume and prices (both including and excluding trade associated with VAT MTIC fraud) should be treated with a great deal of caution.

Interpreting the data

In months where quarterly and 3-monthly ending percentage changes for index data coincide, there may be small differences between the data for methodological reasons. Quarterly data are the indexed form of an underlying constant price (for volume indices) or consistent quantity (for price indices) seriesThe average of the index data in that period are 3-month ending data.

Seasonal adjustment

Seasonal adjustment aims to remove effects associated with the time of the year or the arrangement of the calendar so that movements within a time series may be more easily interpreted.

The UK trade record information for July 2016 can be accessed on our website.