UK Foreign Trade, 3rd Quarter 2021: Alongside all the economic data published last week by the Office for National Statistics (ONS) was the information about foreign trade (exports/imports).
The UK’s trade deficit in goods widened to £39.9 billion excluding the highly volatile precious metals category (it was £42.3 billion with this group of products added back) in the 3rd quarter - this is the 3rd largest deficit ever recorded behind only the 4th quarter of 2020 and the 1st period in 2019. This increased deficit came as a result of both a fall in exports and an increase in imports, with the main change in both series coming in trade with non-EU countries and more modest changes (but in the same direction) for trade with the EU.
At the start of 2021, the share of goods exports to the EU fell sharply, but it has recovered in the following two quarters and is now back at just over 50% for only the 3rd quarter since 2015 - prior to then, it was the exception for the EU to account for less than half of UK goods exports. For imports, the EU has accounted for less than 50% of our imports in each of the three quarters of 2021 - before then, this had only happened in one quarter this century (Q2-2011).
You can download the ONS Statistical Bulletins from their web-site at https://www.ons.gov.uk/releasecalendar (11 November) or request them from MTA.
UK Productivity estimate, 3rd Quarter 2021: There are two principal ways to measure productivity - output per job and output per hour worked, with the latter being the preferred measure as it takes account of short-time or overtime working.
Data published by the ONS shows that in the 3rd quarter of 2021, output per hour across the whole economy was +0.5% higher than pre-pandemic (taken in this case to be the average for 2019), despite a fall of -1.2% compared to the previous quarter. The quarter-on-quarter reduction came because hours worked increased more rapidly than output (measured using gross value added - GVA) as the furlough scheme moved towards closing at the end of the quarter.
For the manufacturing sector, output per hour improved by +0.8% compared to the previous quarter and was +6.3% higher than before the pandemic. For this sector, both comparisons came because hours worked fell by a larger percentage than GVA.
There is, however, a considerable variation between the major sub-sectors; for example, while machinery manufacturers saw a quarter-on-quarter fall in output per hour of -2.2% but with a level that was +11.2% higher than the average for 2019, for the transport equipment industries (automotive, aerospace, etc.) the trends were +3.3% and -10.0% respectively.
In contrast, using the alternative measure, for the whole economy, output per worker increased by +0.5% on the previous quarter but was -1.1% lower than the average for 2019 (pre-pandemic).
You can access the ONS bulletin and data files from their web-site at https://www.ons.gov.uk/releasecalendar (11 November) or request them from MTA; we have added the commentary for the manufacturing sector and its industries based on the ONS data tables.