Previous
Consensus
Actual
Level
Stg-10.53 B
Stg-10.7 B
Stg-9.88 B
Imports-M/M
5.9 %
-4.7 %
Imports-Y/Y
6.8 %
2.8 %
Exports-M/M
9.1 %
-8.2 %
Exports-Y/Y
6.7 %
-4.1 %
Highlights
The global deficit on trade in goods weighed in at notably smaller than expected Stg9.88 billion in May and that after a significantly downwardly revised Stg9.41 billion in April. Excluding oil and other erratic items the shortfall widened out slightly from Stg9.47 billion to Stg9.70 billion.
The monthly headline deterioration was attributable to an 8.2 percent slump in exports that unwound April's surge and more than offset a 4.7 percent drop in imports. The bilateral deficit with the rest of the EU climbed from Stg6.90 billion to Stg7.31 billion but the shortfall with the rest of the world was essentially flat at Stg2.57 billion.
The data have been especially erratic in recent months but the signs are that net exports provided a boost to second quarter GDP growth having weighed quite heavily at the start of the year.
For some time now the burgeoning current account deficit (a near-record 6.9 percent of GDP in the first quarter) has failed to have any real impact on the pound as overseas investors have been happy to fund it through purchases of UK assets. However, the Brexit vote has brought the red ink clearly into focus and leaves the currency particularly vulnerable to any loss of investor confidence. To this end, the May outturn and revisions should come as something of a relief. That said, a solid trend improvement will be needed if the external imbalance is not to continue to put downward pressure on the exchange rate over the medium-term.
Note that today's report does not include any information on real exports or imports due to measurement problems at the ONS. Worries about the accuracy of the trade data are nothing new and lack of volume statistics will only add to such doubts.