·
Foreign trade developments are always interesting in the UK,
since it is involved in so many different kinds of activities: manufacturing,
shipping, insurance and oil, to name a few. In October, the balance on
goods and services decreased by £1 billion to £2.9 billion as exports
rose and imports fell from September amounts. The balance on fuel returned
to a near neutral position after reaching unprecedented deficits in August and
September. The balance on services was steady, reestablishing its old
trend after a plunge in August due to Hurricane Katrina.
· Among exports, manufactured goods maintained a firm trend for a third month, breaking a prior wide seesaw pattern. The value of crude oil exports surpassed £2 billion for the first time, ironically even as oil prices actually fell slightly from September; the volume of crude shipped surged more than 33% after sagging in August and September.
· On the import side, widespread decreases in manufactured goods
contributed to a £681 million decline in total goods imports. Vehicles
were down £158 million and other finished goods £256 million, the latter a
second successive decrease that basically offset a jump in August. Oil
imports also fell, with both a volume decrease and a slight drop in the unit
value.
· Insurance payments figured heavily in an earlier swing in the trade balance. According to the ONS, Lloyds of London paid out an estimated £1.4 billion in benefits for Hurricane Katrina losses. The last time such a large negative flow (a negative export of services provided by a UK entity, not to be confused with an import of services, which would be provided by a foreign entity) occurred was in September 2001, and that was considerably more, at about £2.3 billion. Both of these were one-time payments, so the broad service export total quickly reversed to its then-current amounts. The overall balance on services had thus been a mere £457 million in August, but rebounded quickly to £1.7 billion in September and was basically unchanged in October.