Boost as trade deficit narrows

The economy bounced out of recession in the third quarter, growing by 1 per cent, but weak economic data since then had made some analysts concerned that this growth figure could be revised lower.

However, official data released yesterday showed the goods trade deficit shrank to £8.4bn in September from £10bn in August, and the quarterly trade gap shrank as well. Economists had forecast a September goods deficit of £8.9bn.

The overall trade deficit, which includes the more buoyant trade in services, also narrowed to £2.7bn, down from £4.3bn in August, the Office for National Statistics said.

Manufacturing surveys have shown renewed weakness with companies reporting a drop in export orders in October as the eurozone, Britain’s largest export market, is teetering on the brink of recession.

The figures showed exports to the European Union in the third quarter were 2.5 per cent lower than a year earlier, while exports to elsewhere in the world were 13.3 per cent higher.

Falling construction output was the main drag on GDP this year, and yesterday’s figures reinforced this trend, with output falling to its lowest level since 1999 in the third quarter, in line with estimates.