UK Trade Deficit Narrowed Due to Growth in Non-EU exports

The UK’s trade deficit fell to 2.7 billion pounds in May on the back of growing exports, compared with £4.1 billion pounds in April, according to the Office for National Statistics.

The seasonally adjusted volume of exports was 6.6 percent higher, while imports rose 1 percent.

The UK’s exports to non-EU countries were unusually higher than exports to the EU, indicating that exporters are adjusting to supressed demand from the euro zone, due to the debt crisis, the British Chambers of Commerce reported.

The goods deficit was smaller in May – 8.4 billion pounds – compared to April – 9.7 billion pounds, while services remained unchanged at a surplus of 5.6 billion pounds. A different report showed that manufacturing output unexpectedly rose by 1.2 percent in May, thanks to an extra working day as a result of a postponed bank holiday.

The Diamond Jubilee and warm weather also helped boost the food and drink sectors, which showed 2.2 percent increase in May, compared to April.

Overall, the economic big picture remains rather negative for Britain, with the seasonally adjusted index of manufacturing falling 1.7 percent in May compared to the same month last year.

Source: BBC

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.