-Bank of England
British trade deficit narrowed to the lowest level in almost two years in May as imports declined, while exports to the Euro bloc rose. The trade shortfall shrank to 8.0 billion pounds from 9.4 billion pounds in April, according to the Office for National Statistics. Economists, however, had expected a deficit of 9.7 billion pounds.
Goods exports climbed 0.1% in volume terms from April, while imports plummeted 5.5%, dragged down by lower imports of ships and material manufactures. Exports to the Euro zone climbed 3.3%, although sales to the wider European Union fell 0.3%. Imports from the EU decreased 3.3% and those from other countries dropped 5.1%. Britain has largely relied on domestic consumption to underpin its economic recovery since the middle of 2013, frustrating the hopes of Prime Minister David Cameron to make exports a bigger driver of the country's economy. Exporters have struggled with weak demand in the Euro zone, the main destination for British goods and services, and a rally in the Pound.
The ONS also said that construction output dropped by 1.3% in May from April, mainly due to lower housebuilding. It was the biggest decline since February of last year. Compared with the same month a year ago, construction output rose 1.3%, the slowest pace of growth since November 2013.
© Dukascopy Bank SA