View from City Road: Too much swing in the trade figures

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The astounding swing in the September trade figures underlines once again the disrepute into which these statistics have fallen. In August, Britain ran up a too-good-to-be true deficit of pounds 419m, which was itself revised downwards to pounds 347m. In September, the shortfall trebled. Can the figures be trusted?

As followers of this arcane subject will know, the problems were caused by the single European market. From 1 January European Union trade-flows were no longer measured by customs agents but based on VAT returns from importers and exporters. The European component of the trade data has been subject to big revisions as late data comes in, leaving the trade figures questionable.

The Central Statistical Office claims the so-called Intrastat system has overcome the worst of these teething problems. But the statistics agency also faced problems of seasonal adjustment because it had no past record of the patterns of trade based on VAT returns.

These difficulties, it says, are being resolved and future revisions to the figures should be less dramatic. Since the agency has yet to accumulate one year's run of the VAT-based trade statistics, it is difficult to believe adjustment problems are over.

At best the figures may be providing us with a reasonable guide to trade patterns, from the headline figures over a period of months. But it is too early to take them, detail and all, at face value.