UK trade deficit shrank in September much more than expected, according to the National Statistical Office data. The report includes information on trade in goods, not services. The deficit shrank from 12.35 billion GBP in August to 11.253 billion GBP in September, while economists expected a value of about 12.8 billion GBP.
There is a large improvement in the trade balance of goods with countries outside the European Union. It shrinks to 2.982 billion GBP, which is the lowest value since May.
However, good data for September will not be enough to prevent the worsening in the third quarter as a whole. It is trade that is a significant burden on economic growth during the period July-September.
So far, there has not been any indication of a strong incentive for British exports from the sharp devaluation of the currency over the past year.
The British pound retreated sharply in the wake of the Brexit referendum vote on June 23 last year when it was 1.48 USD. It is currently trading at 1.32 USD, providing some stimulus to exporters. The weak British pound has also affected imports, with import volume remaining flat in September on the August figure, moving up just 0.2 percentage points.