Britain posted a larger-than-forecast trade deficit in August and construction output fell at the fastest pace since 2012, underlining the economy’s slowing momentum.
The goods trade deficit was 11.1 billion pounds ($17 billion) compared with an upwardly revised 12.2 billion pounds in July, the Office for National Statistics said in London on Friday. Economists in a Bloomberg survey had forecast a narrowing to 9.9 billion pounds. Construction output fell 4.3%, compared with forecasts for a 1% increase.
Cooling global growth and a strong pound are starting to take their toll on British companies, leaving Bank of England officials in no hurry to raise the benchmark interest rate from a record low.
Net trade, the biggest contributor to Britain’s expansion in the second quarter, is on course to hold back growth in the third. A drop in exports saw the deficit in goods and services widen to 8.1 billion pounds between June and August, more than double the gap in the whole of the second quarter. September would need to record a record surplus for the trade deficit to narrow over the quarter.
The pound weakened after the data and was trading at $1.5346 as of 9:37 a.m. London time.
Exports rose 3.5% in August from July, when overseas shipments slumped to their lowest level since 2010. Imports fell 0.7%. The trade deficit in July was revised from a previously estimated 11.1 billion pounds and was the largest since December.
With the surplus on services increasing in August, the total trade deficit narrowed to 3.3 billion pounds, the ONS said. Economists had forecast a gap of 2.2 billion pounds.
Wet August
The drop in construction output was the largest since December 2012, with all categories falling for the first time in five years.
The ONS attributed the decline to construction workers taking more vacation in August than is usual for the time of year and wetter-than-normal weather, particularly toward the end of the month. Southeast England had the rainiest August since 1977, according to the Met Office.
An 8% increase in September would be needed for construction output to be unchanged in the third quarter from the second, the ONS said.
