UK May trade deficit widens unexpectedly

Britain's goods trade deficit with the rest of the world widened unexpectedly in May to its second highest on record as the country once again became a net importer of oil, official data showed on Tuesday.
The Office for National Statistics said that Britain's goods trade gap widened to 6.753 billion pounds in May from a downwardly revised 5.568 billion in April. Economists had forecast a deficit of 5.7 billion pounds.
Oil accounted for around half of the deterioration, with the balance swinging to a 320 million pound deficit in May from a surplus of 201 million the month before, largely due to a surge in imports as domestic production geared down.
Total goods imports rose 3.9 percent to hit a new record of 27.947 billion pounds, driven by higher imports of cars, capital goods and aircraft. Exports, meanwhile, dipped 0.6 percent. The ONS said its estimate of the trend was that the gap was widening.
The pound fell nearly half a cent against the dollar and hit a day's low against the euro after the data. Analysts said the figures held few implications for monetary policy, although policymakers may be concerned that a sustained pick-up in exports from Europe has yet to materialise.
"Still sluggish domestic growth on the (European) continent, in addition to the recent rise in sterling, appears to be undermining the export sector for now at least," said Gavin Redknap, an economist at Standard Chartered.
"If that remains the case, then calls to keep rates on hold will grow louder."
Britain had a 2.335 billion pound surplus in the trade in services, up from 2.141 billion in April, taking the total trade deficit to 4.418 billion pounds from 3.427 billion the previous month.
Excluding oil and erratic items, the total goods deficit widened to 6.137 billion pounds from 5.664 billion, the highest since February, due mainly to higher car imports and lower exports of capital goods, the ONS said.
The goods trade gap with non-EU countries widened to a bigger than expected 3.715 billion pounds in May against forecasts for 3.3 billion pounds and versus 3.386 billion pounds in April.