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Brexit stockpiling hits record high for manufacturers

1st Apr 19 9:48 am

Manufacturing output saw a surge last month helped by Brexit stockpiling, as firms sought to avoid being caught out with what should have been Britain’s withdrawal from the EU.

The Markit/CIPS UK manufacturing purchasing managers’ index (PMI) had a reading od 55.1 in March compared to 52.1 the previous month.

This beat expectations from economists as it represents a 13 month high, economists predicted a forecast reading of 51.2.

Rob Dobson, director at IHS Markit, which compiles the survey said, “Manufacturers reported a surge of business activity in March as companies stepped up their preparations for potential Brexit-related disruptions.

“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.”

Inventories were stepped up by company’s ahead of the original 29 March EU withdrawal date, then the government asked for an extension.

Duncan Brock, of the Chartered Institute of Procurement & Supply said business will now have to resort to “heavy discounting” to free up valuable operating expenses, should normal order levels not be restored.

A chaotic no-deal Brexit is a real possibility as MPs continue to squabble in the House of Commons and on prime radio spots.

New business from domestic and export markets helped manufacturing activity, this created a positive impact on staff recruitment.

However, the industry has strong headwinds coming as EU companies are leaving Britain and investment is starting to dry up.

Dobson said: “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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