The deficit on goods increased from an upwardly revised £15.21 billion in August to an expected £16.3 billion in September. The value of UK goods imports fell by roughly £3.0 billion or 6.3 percent, with declines from both EU and non-EU countries. Goods exports also decreased significantly, dropping by £3.4 billion or 12.6 percent after a rise in August. Machinery and transport equipment experienced notable reductions in both import and export volumes across EU and non-EU trade partners.

For the third quarter of 2024, the total trade deficit in goods and services widened by £1.5 billion to £11.4 billion, driven by a larger decline in exports compared to imports. The trade in goods deficit narrowed by £1.9 billion to £51.1 billion, reflecting improvements in the goods trade balance. However, the trade in services surplus contracted by £3.5 billion to £39.6 billion, partially offsetting gains in the goods trade.

These figures indicate a challenging trade environment, with both imports and exports under pressure, particularly in key sectors such as machinery and transport equipment. The latest data put the UK RPI at minus 20 and the RPI-P at minus 24, indicating that economic activity in general is falling somewhat behind market forecasts.

The September deficit on overall goods trade is put at £16.4 billion, a modest improvement versus August's £15.06 billion shortfall.

The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness. Data are supplied by over 30 sources including several administrative sources, HM Revenue and Customs (HMRC) being the largest.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets.

Imports indicate demand for foreign goods and services in the UK. Exports show the demand for UK goods in countries overseas. The pound sterling can be particularly sensitive to changes in the trade deficit run by the United Kingdom, since the trade shortfalls create greater net demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.

The UK's trade balance is particularly susceptible to swings in the oil account and so within the overall goods balance, financial markets will normally focus on the balance excluding oil and other erratic items.