UK exports strengthen

October exports rose by £0.9 billion (4.1 per cent) to £23.1 billion compared with September while exports to the EU rose by £1.4 billion (12.4 per cent) to £12.8 billion. However, total imports rose too, by £1.1 billion (3.4 per cent) to £31.6 billion, marginally widening the deficit on trade in goods by £0.1 billion to £8.5 billion, compared with a deficit of £8.4 billion in September. However, the deficit on trade in goods with EU countries narrowed by £0.3 billion to £3.5 billion, compared with a deficit of £3.8 billion in September. Commenting on the data, Chris Williamson, chief economist at Markit, said: "October's increase in exports builds on the encouraging upbeat manufacturing survey data in recent weeks, which have shown a renewed surge in overseas sales which gathered pace in November. UK exporters are benefitting from strong growth in major trading partners such as Germany, France and the US, as well as robust demand from many emerging markets, which is offsetting some weakness in deficit-fighting countries such as Ireland. "This export growth needs to continue as trade will have to be a key driver of the economy in coming months. Stronger exports are needed to offset the growing likelihood of subdued domestic demand, as consumer spending in particular is squeezed by higher VAT, government spending cuts, falling real incomes and the ongoing hit to wealth generated by lower house prices. "The surge in imports is likely to be a temporary phenomenon, and is not altogether negative as we believe it is to a large extent due to factories rebuilding their inventories. Once stocks have returned to normal, manufacturers will be on a better footing to sustain rising output and exports, helping net trade to contribute positively to economic growth."