Britain's trade deficit narrowed unexpectedly in June to its smallest since October 2005 as the surplus on the oil balance reached its highest level for more than two years. The figures showed exporters were coping well with the strength of the pound, aided by the strength of the global economy.
The Office for National Statistics said Britain's goods trade gap narrowed to 6.3 billion pounds in June from 6.4 billion in May. Economists had forecast the deficit would widen to 6.5 billion pounds.
There was a 2.7 billion pound surplus on trade in services, little changed from the previous month, bringing the overall deficit to 3.6 billion pounds against 3.7 billion in May. Oil exports rose sharply as the new Buzzard oil field in the North Sea came fully on stream. That helped to push the oil balance into surplus for the first time since March 2005, at 257 million pounds.
Exports generally were buoyant. Indeed, exports to the United States rose to their highest on record, despite the pound flirting with 26-year highs against the dollar.
Signs of a rebalancing of Britain's economy will be welcomed by the Bank of England, as will an easing in import price inflation. Import price inflation fell 0.4 percent on the month, although analysts noted that the underlying three-month rate was still higher than at the same time last year.
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