"Housing "U.K. trade looks finally to be on a slow path to recovery after years of stagnation. Higher exports would support the theory than there is demand for what the U.K. produces, and that it is not just an inventory build-up."
- Simon Wells and John Zhu, economists at HSBC Holdings Plc
The U.K. trade deficit shrank more-than-expected in June as export rose to a record in the second quarter adding to evidence the nation's economy is moving onto a more sustainable footing. According to the Office for National Statistics, the deficit in goods narrowed to 8.1 billion pounds, the lowest since July 2012, from 8.7 billion pounds a month earlier. The trade gap declined to 1.5 billion pounds compared to 2.6 billion pounds in May.
The main contributor to the positive data were overseas sales to countries outside the European Union, with goods exports to China hitting record high in June and rising more than 20% in Q2 from a year earlier. In contrast, U.K.'s exports to Germany declined 9% in the April-June period, whereas imports, especially of pharmaceuticals, rose sharply. Overall, exports of goods increased 4.9% to 78.4 billion pounds in the second quarter, the most since 1998, spurred by an increase in sales to the U.S. and China. Likewise, imports of goods rose to 103.3 billion pounds, the highest since 2011.
Official figures also showed a rebound in construction activity in three months to June, adding to optimism surrounding the U.K. economic outlook.
© Dukascopy Bank SA