Yesterday's figures also appeared to provide further evidence that a recovery is under way with an increase to record levels in import and export volumes last month and taking the last three months together.
The shortfall in trade in goods - visible trade - last month narrowed by pounds 100m from March, and was the lowest trade deficit excluding the EC for six months. Figures for trade with the Community, which accounts for roughly 55 per cent of Britain's overseas trade, have been temporarily suspended since a switch from customs- based to VAT-based trade statistics began with the advent in January of the single European market. A preliminary estimate for first quarter trade with the whole world is expected next month.
The Treasury said it was 'very encouraged' by the narrower deficit in April but warned it was too soon to say whether the short-run boost to the value of imports due to sterling's depreciation had worked through.
But figures for export and import volumes, usually a better guide to the trend than values, did offer tentative evidence of improvement.
Excluding trade in oil and erratic goods, such as ships, aircraft and precious stones, the volume of exports rose by 1.5 per cent last month. In the three months to April, a more reliable guide to the underlying trend, export volumes rose by 6.5 per cent, against 5.5 per cent in the three months to March.
The figures suggest that the depreciating pound may have finally delivered a competitive advantage to British exporters, in markets outside the recession-struck EC, even allowing for sterling's partial recovery in March and April. The pound has fallen particularly sharply against non-EC currencies.
Import volumes rose more modestly, increasing by 0.5 per cent during April and by 2 per cent in the latest three months, against a 3 per cent advance in the first quarter this year. Although rising imports were taken as a sign of recovery, some analysts expressed concern that the slowing rate of import growth might indicate ebbing domestic demand.
Last month trade with North America resulted in an pounds 85m surplus, the first since May 1992. In what may provide a rough guide to trade trends with EC member states, the deficit in trade with other countries in Western Europe narrowed to pounds 603m in April from pounds 685m the previous month.
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