Brexit stockpiling pushes the latest manufacturing PMI to 13-month high

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The latest IHS MARKIT / CIPS UK Manufacturing PMI is at a 13-month high spurred by Brexit-related stockpiling. Anna Tobin reports

Safeguarding against Brexir-related shortfalls led to record increases of purchased and finished product stocks being reported in the IHS MARKIT / CIPS UK Manufacturing PMI survey for March. The headline seasonally adjusted PMI rose to a 13-month high of 55.1 in March, up from 52.1 in February. The PMI has stayed above 50 for 32 consecutive months now.

New business improved from domestic and export markets, which led to a growth in jobs recorded. The rate of increase in purchased stocks was at a survey record high for the third consecutive month too and stock of finished goods was also up.

There was also a rise in average purchase prices in March, a result of raw material shortages, inflationary pressures, Brexit and higher energy costs.

“Manufacturers reported a surge of business activity in March as companies stepped-up their preparations for potential Brexit-related disruptions,” said Rob Dobson, director at IHS Markit. “Output, employment and new orders all rose at increased rates as manufacturers and their clients raced to build safety stocks. Stocking of finished goods and input inventories surged to new survey-record highs.

“The stock-building boost introduces a major headwind for demand, output and jobs growth moving forward. Manufacturers are already reporting concerns that future trends could be constrained as inventory positions across the economy are unwound. The survey is also picking up signs that EU companies are switching away from sourcing inputs from UK firms as Brexit approaches. It looks as if the impact of Brexit preparations, and any missed opportunities and investments during this sustained period of uncertainty, will reverberate through the manufacturing sector for some time to come.”

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