THE UK's global goods trade deficit narrowed from £10.5 billion in September to £9.62bn in October, largely because of a fall in the value of oil imports amid weakness in crude prices, official figures have revealed.
The seasonally-adjusted figures, published yesterday by the Office for National Statistics, show that exports edged up from £24.1bn in September to £24.3bn in October, with sales of silver to India cited as a factor in this modest rise.
However, a drop in goods imports from £34.6bn to £34bn played a far greater part in the narrowing of the goods trade deficit between September and October.
The ONS cited a reduction of £900 million between September and October in the value of fuel imports. It highlighted a sharp fall in oil imports from countries outwith the European Union.
The UK's oil imports fell by more than £700m to £3.52bn, the ONS noted. Oil exports, at £2.684bn in October, were up marginally from September in spite of the drop in crude prices.
Although UK goods exports rose between September and October, they were down on a three month-on-three-month comparison.
The UK's inability to achieve significant and sustained export growth has been a key worry for economists, with the country's recovery remaining unbalanced.
A sharp rise in manufactured exports had been at the heart of Chancellor George Osborne's March 2011 vision for the UK economy, but this has failed to materialise.
The UK's goods exports totalled £71.7bn in the three months to October, down about £600m on the figure for the May to July period.
However, a sharper drop in imports enabled the UK to record a narrowing of its trade deficit between these three-month periods.
The UK's goods trade deficit in the three months to October came in at £30.3bn, down by £1.3bn on the May to July period.
Imports totalled £102bn in the August to October period, down by £1.9bn on the preceding three months.
In October, the UK recorded a surplus of £7.6bn on trade in services with the rest of the world. This was down marginally from September, when the UK achieved a services trade surplus of £7.68bn.
The UK's overall deficit on trade in goods and services narrowed from £2.82bn in September to £2.02bn in October.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "October's markedly-improved trade data in volume terms lift hopes that net trade will make a rare positive contribution to UK GDP (gross domestic product) growth in the fourth quarter. This would be a significant boost to the chances that growth will hold up well in the fourth quarter and come in close to the third quarter outturn of 0.7 per cent quarter-on-quarter."
He added: "Even so, the suspicion remains that UK growth will remain heavily reliant on domestic demand, with net trade finding it difficult to make sustained positive contributions to UK growth in the near term at least.
"The combination of weak eurozone economic activity and a still relatively strong pound is hampering the prospects for UK exports to develop decent growth and help overall economic expansion to become more balanced. Furthermore, global growth is currently muted, with the outlook uncertain."
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