UK trade deficit spikes in July Industrial production contracts

FXStreet (Mumbai) - The UK Office for National Statistics (ONS) data released on Wednesday showed the UK industrial production unexpectedly contracted in July, while the exports fell at a fastest pace in nine years.

The goods/visible trade deficit widened to GBP 11.1 billion in July, beating the estimate of GBP 9.5 billion. The total trade deficit widened to GBP 3.4 billion. The surplus in services increased to GBP 7.7 billion. In the second quarter, the total deficit narrowed more than previously estimated to GBP 3.4 billion. However, the sharp rise in July deficit is likely to negate any optimism that could generate from the squeeze in Q2 deficit.

Exports plunged 12.6% in July due to falling shipments to the US, Switzerland and China.

UK industrial production contracts

Meanwhile, UK industrial production fell 0.4% from June, missing the estimate of a 0.1% gain by a wide margin. Manufacturing dropped 0.8%, against a forecast for a 0.2% increase. Oil and gas production fell 0.4%. Factory output dropped 0.5% from a year earlier, while overall production increased 0.8%.

The widening of the trade deficit and the drop in the exports is hardly surprising, since the PMI reports since May have been highlighting the drop in export orders due to Sterling exchange rate.
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