- Tim Hinton, a managing director at Lloyds Bank
The UK recorded a larger-than-expected trade deficit in August, while construction output dropped at the fastest pace since 2012, suggesting the British economy is losing momentum. The nation's trade shortfall came in at 11.1 billion pounds, compared with an upwardly revised 12.2 billion pounds a month earlier, according to the Office for National Statistics. Economists, however, had predicted a narrowing to 9.9 billion pounds. The UK's deficit on trade in goods and services dropped from 4.5 billion pounds in July to 3.3 billion pounds in August, while exports of goods increased by 0.8 billion pounds to 23.6 billion pounds, driven higher by a 0.6 billion pounds increase in car exports to a record 2.4 billion pounds. Meanwhile, imports declined 0.3 billion pounds to 34.7 billion pounds over the same period.
At the same time, construction output dropped 4.3% after the 1% decrease in July. An unprecedented 8% gain in September would be needed for construction output to be unchanged in the third quarter from the second, the ONS estimated. Slowing global growth as well as a strong Pound are taking their toll on UK companies, leaving the Bank of England in no rush to hike the benchmark interest rate from an all-time low.
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