According to one survey, manufacturers’ panic stockpiling prior to a possible no-deal Brexit saw activity attaining a 13-month high in the sector in March.
Stockpiling Activity
In the midst of fears that exports and imports would be delayed at the UK border, firms hoarded raw materials and completed goods at the quickest monthly rate of G7 states since 1992.
The IHS Markit purchasing managers’ index (PMI) rose to 55.1, the biggest since February 2018, with employment, new orders and output going up at increased rates while manufacturers rushed to place ‘buffer stocks’ inside their warehouses.
The rise in output in the UK contrasts with a muted Eurozone, which remains steeped in recession following a deterioration. Germany adversely affected the Eurozone PMI after dropping to 44.1; Italy fell together with France, which lingered around the 50 mark. The sole positive note for European manufacturers was a shock increase in the output of China, with a raised PMI to 50.8.
Car manufacturers in the UK have been hit by lagging sales to China. Early this month, car companies said their concerns over Brexit were ‘at fever pitch’ following numbers in February showing a 15% year-on-year fall in output.
As with other industries, Brexit is affecting UK manufacturers of silicone moulding. They include http://www.meadex.co.uk/silicone-mouldings.
The BBC looks at stockpiling in the event of a no deal here: https://www.bbc.co.uk/news/av/business-47308935/are-we-stockpiling-in-case-of-a-no-deal-brexit.
UK Manufacturing Growth
A director at IHS Markit, Rob Dobson, commented that the jump in manufacturing activity in the UK is directly related to firms stepping up their preliminary plans for possible disruption connected to Brexit.
He said the survey is receiving warnings that firms in the EU are moving away from sourcing inputs from companies in the UK as Brexit nears. It seems the effect of preparations for Brexit, plus any missed opportunities during this uncertain period, will echo through the sector for quite some time.
Capital Economics, a consultancy, remarked that its analysts were circumspect about the effect of stockpiling. They said they would warn against presuming that stock-building is supporting economic growth, since evidence is scanty among other figures like imports. Even if this was the case, the boost to activities would be temporary. However, given the contraction in the Eurozone, UK manufacturing seems to be bearing up.
