As usual, the UK services sector is doing especially well – domestic demand for homegrown services is still strong - notching up a £5.6bn surplus in July despite a 0.9% fall in services exports. Goods aren’t doing so well on paper, showing a deficit of £7.1bn. However, this is the smallest deficit in goods we’ve seen since February.
And there has been marked improvement in the UK’s export showing. We sold 9.3% more goods overseas in July, with exports to non-EU nations reaching a record high.
The latest round of heartening trade data adds to the general optimism generated by the improvement in manufacturing and services PMI recently, and the UK’s increased industrial output. But for all those putting their ‘Financial Apocalypse Is Nigh’ placards back in mothballs, it’s worth remembering that data has been extremely volatile in recent months an it’s hard to get a clear picture of where the UK is really headed.
Across the last quarter as a whole, exports were up just 0.8% in the three months to July compared to the previous quarter, with goods exports up a mere 0.3%. Imports of goods are still down 2.1%, which indicates weak domestic demand – we’re not suddenly making everything we need here in the UK, we’re simply buying less overall.
Not to rain on the trade parade but recovering from a dismal June, which was hampered by all those extra bank holidays, is not the same as getting back to growth proper. And if we are heading for an upturn, the recovery, thus far, is still pretty fragile…