Export dashboard: trade gap narrows but exports remain weak

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The second monthly Export Dashboard was published today. The dashboard provides a snapshot of what is happening to exports – looking not just at the value of exports over a three month period but also the destination of exports and how export orders are changing.

So what is this picture telling us?Analysis first published in today's Telegraph

The most recent trade data shows that we saw a narrowing of the trade gap in September but exports remain weak.

The value of goods exports fell £600m in the three months to October compared with the three months to September, reaching £74.9bn and continuing the trend we saw last month.

However, imports also fell and at a faster rate than exports, resulting in a narrowing of the goods trade deficit by 3.6%. While overall net trade looks more positive, the weakness in exports is an area of concern and shows that the UK still has some way to go towards rebalancing and in meeting the Chancellor's £1 trillion target.

These short-term figures need to be understood in the context of wider trends in trade data. The value of goods exports grew over 13% between 2010 and 2012, showing that exports have largely continued to grow since the end of the recession despite the falls we have seen in the past couple of months. Looking ahead, we expect to see the UK's export performance continue to improve.

Looking below the headline figures, there is some positive news that shows some markets are seeing exports grow. While exports to the European Union fell 4% in the three months to October when compared with the previous three months, exports to non-EU countries grew by 2.6%, continuing the trend of the past couple of years which saw exports to non-EU markets catch up and exceed those to EU markets.

The largest growth in goods exports to non-EU markets came from South Korea, which saw a 39% increase in the three months to October compared with the three months to September, Canada (5.5%) and China (4.4%). Goods exports to all major countries in the EU were down in the three months to October, with the largest falls to the Netherlands and Spain.

EEF's Business Trends Survey covering the fourth quarter shows strong results. We saw some weakening in export order balances, although a positive balance of 7% of companies expect to see a pickup in export orders in the next three months. The domestic market is still strong and order balances are expected to hold up over the quarter.

Total exports for the year to September 2013 were £503.9bn.

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