The UK’s trade gap widened sharply in June, to its worst level since comparable records began in 1997. The trade deficit in goods increased, as car exports crashed by 12% resulting in the total trade shortfall in goods and services widening to £4.3bn, the largest on record. With the export components in the PMI and CBI (Confederation of British Industry) business surveys suggesting that overseas demand remains weak, it is difficult to see a re-balancing of the UK economy anytime soon.
On contrast, The US trade deficit narrowed in June as a steep drop in oil prices helped ease the country’s import bill, while exports increased slightly. The trade gap in June shrank by 11% to $42.9bn, the smallest since December 2010. This better than expected release may help boost Q2 growth figures when released later this month. Further good news came as fewer Americans filed applications for unemployment benefits last week with jobless claims dropping by 6,000.
Further, the faltering demand from the eurozone and the US resulted in China’s exports rising by just 1.0% in July from a year earlier, with imports up 4.7%. This collapse in export growth adds to worries that the global economy is weakening and raises expectations that Chinese authorities will step up measures to promote expansion.
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