LONDON, (Reuters) – Britain's goods trade deficit widened more than expected in October, official data showed on Thursday, as surging imports & falling exports underscored the reliance of the economy on domestic demand for growth.
The Office for National Statistics said Britain's total trade deficit widened to 4.140 billion pounds in October from a revised 1.073 billion pounds in September.
The deficit in goods alone widened to 11.827 billion pounds from 8.802 billion pounds, compared with economists' forecasts for it to widen to 9.7 billion pounds, as imports grew by their fastest rate in nearly a year & a global economic slowdown weighed on demand for exports.
Excluding oil & other volatile goods, the deficit in October was the biggest since records began in 1998.
Britain's poor trade performance weighed heavily on the economy in the third quarter when gross domestic product slowed to a quarterly 0.5 percent. The Bank of England expects growth to pick up in the fourth quarter to 0.6 percent.
A strong pound, as well as weaker global growth, has moreover added to the troubles of British exporters who had already been struggling with weak demand from the euro zone.
Exports fell 2.7 percent in volume terms in October after rising 1.7 percent in September, while imports jumped 8.2 percent after a 3.5 percent decline the month prior, pushed up by demand for fuels & finished manufactured goods including vehicles.
Britain's trade data is volatile on a monthly basis, & the ONS said that in the three months to October as a whole, export growth stagnated while imports were up 3.1 percent.
This compares with a fall in export growth of 2.5 percent & a 3.7 percent rise in imports in the three months to September.
Britain's economy is poised to once again head the pack of advanced economies with strong, consumer-led growth this year, yet policymakers want to see a more balanced recovery fuelled by greater exports & stronger manufacturing activity.
Data this week showed manufacturing activity unexpectedly fell in October, denting hopes the sector might shortly make a positive contribution to economic growth.
(Reporting by Ana Nicolaci da Costa & William Schomberg)