November 8, 2013 / 9:52 AM / 6 years ago

UK trade gap widens, construction growth weaker than thought

LONDON (Reuters) - Britain’s goods trade deficit widened more than expected in September, marking its biggest shortfall in almost a year and meaning trade will act as a drag on overall growth in the third quarter of 2013.

A container ship is moored next to a crane on the quayside at DP World London Gateway container port in Essex, southern England July 30, 2013. REUTERS/Suzanne Plunkett

Another set of data released on Friday showed output growth in the construction sector was weaker than first estimated in the July-September period but will not drag down the overall growth for the period.

The Office for National Statistics said the goods trade deficit grew to 9.816 billion pounds from 9.557 billion pounds in August. Economists had forecast a gap of 9.2 billion pounds.

The goods trade deficit with non-EU countries narrowed to 3.845 billion pounds in September from 4.324 billion pounds in August and against forecasts for a gap of 4.0 billion pounds.

Including Britain’s surplus in trade in services, the overall trade deficit widened slightly to 3.268 billion pounds.

The monthly figures tend to be volatile, but over the three months to September, export volumes fell sharply by 4.6 percent - the biggest fall on that measure since the three months to March 2009 - while imports rose 1.3 percent.

The latest data means trade acted as a drag on quarterly economic growth in the third quarter of 2013. In the previous three-month period, trade’s contribution to GDP was neutral.

Britain’s economy grew by 0.8 percent in the third quarter, compared with the previous three months, according to a preliminary estimate. The ONS is due to release revised GDP figures on November 27.

Britain’s economy has staged a surprising recovery this year but growth has been driven mainly by domestic spending, frustrating the government’s plan to rebalance the economy away from its reliance on British consumers.

The UK’s weak trade performance contrasts with Germany’s trade surplus which rose to a record high in September as exports climbed across the board, data showed on Friday.

Reporting by William Schomberg and Christine Murray

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