UK Goods Trade Deficit Narrows As Pound Weakens

LONDON --The U.K. global goods deficit narrowed in July in what could be the first sign that the weaker pound is helping the country's exporters, but economists doubted the contribution to growth would be enough to prevent the economy from slowing further.

The global goods deficit shrank to GBP7.7 billion in July from an upwardly revised GBP8.0 billion in June, the Office for National Statistics said Wednesday.

The market was expecting a deficit of GBP7.5 billion, according to a Dow Jones Newswires survey of economists last week. June's deficit was revised from GBP7.7 billion reported last month.

"The small improvement reflected a drop in the trade deficit with European Union countries, perhaps partly driven by the weakening in the exchange rate against the euro," Peter Newland, an economist at Lehman Brothers Holdings Inc., said in a note.

The data showed total exports of goods rose 3.0% on the month to GBP22.5 billion in July, while total imports grew 1.0% to GBP30.2 billion. In the three months to the end of July, exports rose 7.5% while imports 6.0%.

Charles Davis, an economist at the Centre for Economics and Business Research, said the depreciation of sterling was likely to fuel exports and help the trade deficit shrink in the months ahead.

But that might not help the economy.