The latest seasonally adjusted figures from the Office for National Statistics shows that the UK trade deficit in the balance of trade in goods in August narrowed from July’s £8.2 billion to £7.8 billion.

This will bring some welcome news to the Chancellor, George Osborne, when you consider that the economists’ general consensus was that it would rise to £8.8 billion.

Overall, when taking services into account as well the total deficit in trade dropped from July’s £2.3 billion to £1.9 billion in August. The surplus in services alone remained unchanged at £5.9 billion.

The £400 million narrowing in the overall deficit was driven by a fall of £600 million in the balance of trade in goods against the other EU countries but offset by an increase of £200 million in the balance of trade in goods with the rest of the world.

ONS Balance of trade Aug 2011

Total exports of goods rose in the month by 0.6% (£200 million) to £25.5 billion and total imports fell £200 million to £33.3 billion.

But however you look at these figures it still represents a net flow of money out of the UK. All that has happened is that outflow has reduced slightly and, interestingly, it has been in the trade of goods with the EU that the good news (albeit small) comes from.

ONS Balance of Trade Aug 2011-1

UK Balance of Trade-click for larger image

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