Trade appears set to make a rare contribution to U.K. economic growth in the second quarter despite a sharp decline in exports in May.
Figures published by the Office for National Statistics Friday showed the deficit in goods and services widened to 2.3 billion pounds from 2 billion pounds in April. Exports fell 4.4 percent, with shipments of goods alone dropping 8.2 percent. Total imports dropped 3.5 percent.
It still leaves the shortfall for the quarter on course to come in well below the 12 billion pounds between January and March. The trade deficit will narrow unless June sees a gap of
7.8 billion pounds, a level never registered in any month on record.
As the shock vote to leave the European Union hits consumer confidence and threatens business investment, trade may emerge as a bright spot if the sharp fall in sterling leads to higher demand for exports.
The figures add to evidence that the economy performed fairly well in the months before the referendum. Growth may have accelerated to 0.6 percent in the second quarter from 0.4 percent in the first, the National Institute of Economic and Social Research estimated on Thursday.
In May, sales of goods to the EU, the destination for almost half of British exports, fell 2.5 percent. Shipments to countries outside the bloc dropped 13 percent.
Separate figures show cost pressures in the labor market picked up in the first quarter, though not to a level that may worry the Bank of England. Unit labor costs rose an annual 1.9 percent compared with 1.5 percent in the three previous months. Productivity measured by output per hour climbed 0.4 percent.