Trade gap slims as exports surge
BRITAIN'S trade gap narrowed in July, official figures showed today - the latest sign that manufacturing has resumed its recovery after stoppages caused by the Golden Jubilee and World Cup.
The figures came as Bank of England Governor Sir Edward George said top central bankers agreed that the major economies were growing, albeit at a sluggish pace. After chairing a G10 central bankers' meeting, Sir Edward also said a global double-dip recession was not seen as a serious threat.
Driven by a surge in exports, especially to the US, Britain's trade deficit shrank to £2.5bn from £2.8bn the previous month. Exports in the three months to July were up a massive 11% compared with the previous three months.
National Statistics last week revealed that factory output leapt by 4.9%, the biggest one-month increase in 23 years. However, separate producer prices figures showed conditions for manufacturers remain tough.
Although raw material costs rose by 0.4% during the month, factory gate prices fell by 0.1%, indicating that profit margins were again squeezed because of an inability to pass on higher costs. Factory gate prices were only 0.3% higher than a year ago, reinforcing the lack of pipeline inflationary pressures in the economy.
Meanwhile, the price of a barrel of Brent crude oil nudged up six cents to $28.35. Earlier, US crude futures burst through $30 amid increasing jitters about a US military strike on Iraq.
