Analysis of Manufacturing Trade Trends in July 2023

The trade data for July 2023 reveals interesting shifts in the manufacturing sector, providing deep insights into the interactions among the UK, the European Union (EU), and non-EU nations. This article explores the key findings from the report, shedding light on the trends that influenced imports and exports during this period.

Summary of Key Points

• July 2023 saw shifts in the manufacturing trade sector, providing insights into interactions between the UK, the EU, and non-EU nations.
• Imports slightly decreased due to lower EU imports, offset by increased imports from non-EU countries. Exports rose primarily because of higher exports to the EU, while exports to non-EU countries dropped.
• Changes in data collection procedures by HM Revenue and Customs in January 2021 and January 2022 affected the reporting of goods imports and exports to and from the EU.
• Fluctuating fuel prices, especially a rebound in gas prices, significantly influenced trade trends, impacting both imports and exports, particularly with non-EU countries.
• July 2023 showed significant shifts compared to June. EU imports decreased, non-EU imports increased due to higher fuel prices. Exports to the EU grew, but exports to non-EU countries declined, resulting in a wider total trade deficit.

Overview of Trade Figures

In July 2023, the value of goods imports saw a slight decrease of £0.2 billion (0.4%). This drop was mainly due to reduced imports from the EU, partially balanced by an uptick in imports from non-EU countries. Notably, the increase in imports from non-EU countries was driven by a rebound in gas prices, following a significant drop in June. Meanwhile, goods exports increased by £0.2 billion (0.8%), primarily due to higher exports to the EU. However, exports to non-EU countries experienced a decline.

Impact of Data Collection Changes

Recognising the impact of data collection changes on UK trade statistics is crucial. Adjustments were made to align imports and exports statistics on a like-for-like basis, reflecting shifts in data collection procedures implemented by HM Revenue and Customs in January 2021 and January 2022. These changes affected the full-time series for goods imports and exports to and from the EU.

Monthly Trade in Goods

In July 2023, total imports of goods experienced a 0.4% decrease. Imports from EU countries saw a decline of £0.5 billion, while imports from non-EU countries rose by £0.3 billion. Conversely, total goods exports saw an 0.8% increase, with exports to the EU contributing significantly to this rise. This led to a narrowing of the monthly balance of trade in goods.

Monthly Trade in Goods by Commodity

Goods imports from the EU saw a decrease, largely influenced by a £0.5 billion reduction in chemical imports. On the other hand, imports from non-EU countries witnessed a 1.4% increase, primarily due to a surge in fuel imports driven by higher gas prices.

Fuel Price Volatility

Fluctuating fuel prices played a central role in shaping trade trends. After a substantial drop in June, the value of fuel imports from non-EU countries surged by £0.6 billion (18.8%) in July 2023. This was attributed to higher gas prices, particularly impacting the value of imports.

Goods Exports: EU vs. Non-EU

Exports to the EU experienced a notable increase in July 2023, driven by higher exports of fuels and machinery. However, exports to non-EU countries declined, primarily due to reduced exports of machinery and transport equipment, and fuels.

Monthly Trade in Services

Early estimates suggest a modest increase in imports of services by £0.1 billion (0.3%) in July 2023, while exports remained stable. The figures reflect the impact of price rises on trade in services, with little variation between trends in value and inflation-adjusted terms.

Trade Dynamics: June vs. July 2023

July 2023 witnessed significant shifts in the UK’s trade dynamics compared to the preceding month. The value of goods imports decreased by £0.2 billion (0.4%), mainly attributed to a drop in imports from the EU. This decline was partially offset by an increase in imports from non-EU countries, driven by higher fuel prices, especially a slight rebound in gas prices following a significant fall in June.

Conversely, goods exports saw an uptick of £0.2 billion (0.8%), driven by heightened exports to the EU, while exports to non-EU countries experienced a decrease. This led to a widening of the total trade deficit in goods and services by £1.2 billion to £18.8 billion in the three months leading up to July 2023. This shift was primarily due to a larger fall in exports compared to imports. It’s important to note that these figures exclude non-monetary gold and other precious metals, which can have a significant impact on trade trends.

The July 2023 trade report offers valuable insights into the performance of the manufacturing sector. Despite a slight dip in imports, increased exports, particularly to the EU, played a pivotal role in shaping the trade landscape. Volatile fuel prices and data collection changes were also key influencers. These findings provide a comprehensive view of the intricate dynamics that underlie the UK’s manufacturing trade.