UK Trade, 2nd Quarter 2023: The final element of the quarterly GDP figures from the ONS that we reported on last week is trade; because of significant distortions from trade in non-monetary gold, we will use the data and trends for the trade in goods excluding precious metals in this note.

The 2nd quarter of 2023 saw imports of goods fall by -2.0% compared to the previous quarter and by -9.0% compared to a year ago (Q2-22). Within the total, there was a small quarter-on-quarter increase in arrivals from the EU (which accounted for 55% of the total) that was more than balanced by a fall in imports from non-EU countries.

By product type, the quarter-on-quarter rise in arrivals of goods from the EU was dominated by a substantial increase in machinery & transport equipment (led by aircraft from France and vehicles from Germany); this was partly off-set by a fall in imports of fuel and chemicals. For the non-EU trade, the main factor behind the reduction was a fall in imports of fuels (mainly gas from Norway and the USA – this is a reaction to demand, with the UK having very little in the way of storage facilities, unlike mainland Europe); this partly balanced an increase in imports of machinery & equipment (mainly aircraft from the USA).

On the same basis, exports of goods were +1.7% higher than in the 1st quarter of the year but -2.6% lower than a year ago. The geographical breakdown is the opposite to that for imports with a small fall in deliveries to the EU (which accounted for 48% of the total in Q2) outweighed by an increase in exports to non-EU countries.

The quarter-on-quarter fall in exports to the EU was driven by a reduction in deliveries of fuels (mainly crude oil to the Netherlands and France and gas to Ireland); against this, an increase in shipments of cars to Belgium drove (pun intended) an improvement for the machinery & transport equipment category and delivery of more organic chemicals to Ireland also made a positive contribution to the trend. For the non-EU countries, the increase in exports was concentrated in the machinery & transport equipment category, led by shipments of mechanical machinery to Hong Kong and road vehicles to the USA.

Finally, our analysis of the trade in machine tools for the first half of the year shows exports from the UK increasing by +2% compared to the same months in 2022 (January to June inclusive), while imports rose by +11%.

For exports, trade with the EU increased by +4%, with the rest of the world seeing a decline of -1%, mainly due to a reduction of -19% in shipments to the USA which were at their lowest for the first half of the year for three years. The analysis of the import data shows that the growth was concentrated in the EU which increased by +22%, with arrivals from the rest of the world broadly flat; within a variety of trends, there was a fall in imports from Japan, China and Taiwan, balanced by increases for the USA, South Korea and Switzerland.

There are more details in the ONS Statistical Bulletin which can be downloaded from their website at (11 August) or on request from MTA.

UK Productivity, 2nd Quarter 2023: The preliminary estimates of productivity from the Office for National Statistics (ONS) show that output per hour (the preferred measure of productivity) across the whole economy was +0.1% higher than in the 2nd quarter of 2022 and +1.4% above its pre-pandemic level (taken to be the average for 2019). Output per worker was unchanged from a year earlier and only +0.4% higher than a year ago.

The improvement in output per hour compared to a year earlier came because output (gross value added – GVA) grew slightly more quickly than hours worked. One factor which affected the hours worked is the extra Bank Holiday in Q2-23 for the Coronation, although this does depend on the comparison being made as Q2-22 also had an extra Bank Holiday (for the Queen’s Platinum Jubilee in this case).

We see this in the breakdown of the data for manufacturing where output per hour was +0.5% higher than a year earlier – as for the whole economy above, this was because GVA grew more quickly than hours worked. Looking back to the pre-pandemic figures, manufacturing productivity increased by +13.9% thanks to a rise in output (+7.2%) and a fall in hours worked (-5.9%).

There are more details in the ONS Statistical Bulletin and dataset which is available on their website at (15 August) or request it from MTA.

UK Profitability, 1st Quarter 2023: The latest data from the ONS shows that the net rate of return for manufacturing companies improved to 8.8% from the 8.4% recorded in the 4th quarter of 2022; however, it only matches the rate recorded a year earlier at the start of 2022.

The net rate of return is the economic gain (profit) as a percentage of the capital used in production. The “net” element of this comes as a result of accounting for the current value of capital consumed and capital stocks. In turn, “capital consumed” refers to the fall in the current value in the stock of fixed assets (for example, because of depreciation).

You can download the ONS Statistical Bulletin and the investment data files from their website at (17 August) or request if from MTA.

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