British trade deficit narrows sharply in Jan. as oil imports drop

British deficit on trade in goods and services was estimated to have been 600 million pounds (or 9 million U.S. dollars) in January 2015, substantially norrowed from the five-year high of 2.1 billion pounds recorded a month earlier, said Office for National Statistics (ONS) Thursday.

Britain registered a 8.4 billion pounds deficit on goods trade, and an estimated surplus of 7.8 billion pounds on services in January, data showed.

Between December 2014 and January 2015, exports of goods fell by 1.0 billion pounds to 24.1 billion pounds, while imports of goods fell by 2.5 billion pounds, of which oil fuels imports decreased by 1.3 billion pounds over the same period, figures showed.

It was the largest monthly decrease of imports since July 2006.

In the three months to January, the trade in goods and services was estimated to have been 4.4 billion pound, almost half of the deficit in the three months to October 2014, figures showed.

From a geographic perspective, Britain recorded trade deficits in goods at 6.7 billion and 1.7 billion pounds with European Union (EU) states and non-EU countries respectively.

Samuel Tombs, UK Economist at Capital Economics, commented in a note that January's trade figures brought more good news on the economy's rebalancing, but sterling's recent strength suggests that the deficit is likely to deteriorate again before long.

He noted that the sterling trade-weighted index has appreciated by 15 percent over the last two years, five percent of which has come over the last two months.

"Although exporters initially offset the impact of the rise in the pound on volumes by cutting their sterling prices, their scope to do this further is now fairly limited," he added. (1 pound = 1.50 dollars) Endit