UK manufacturing reaches 13-month high but analysts say results are ‘misleading’ and put the surge down to Brexit stockpiling
- The latest manufacturing figures showed a reading of 55.1 for last month
- This marks a 13-month high and a massive jump on the 52.1 recorded in February
- But experts put the surge down to firms stepping up their Brexit preparations
UK manufacturing defied the doomsayers last month, with the sector smashing forecasts and reaching a 13-month high.
A reading of 55.1 for March marked a huge jump on the 52.1 figure recorded in February, and flew in the face of economists’ expectations of 51.2.
However, those behind the survey put the jump in manufacturing activity down to Brexit stockpiling, as firms acted to avoid being caught short ahead of March 29 – Britain’s original EU departure date.
Many car manufacturers are understood to have stockpiled cars in the UK last month due to uncertainty ahead of the original Brexit date
‘Manufacturers reported a surge of business activity in March as companies stepped up their preparations for potential Brexit-related disruptions,’ said Rob Dobson, a director at IHS Markit.
He added that output, employment and new orders all rose at higher rates, according to the manufacturing purchasing managers’ index (PMI), as manufacturers and their clients ‘raced to build safety stocks’.
David Cheetham from XTB thundered that the strong figures for March were ‘misleading to say the least’ and ‘obviously not sustainable’, given they reflected mounting no-deal Brexit fears rather than economic hardiness.
The prospect of a no-deal exit from the EU is still a possibility as MPs continue to squabble this week over which form of Brexit to pursue.
The healthy figures actually triggered warnings of difficult times ahead for the manufacturing industry as businesses may end up resorting to heavy discounting to shift the excess stock, and could face being snubbed by firms turning their backs on Britain.
The closely followed Markit/CIPS UK manufacturing purchasing managers’ index (PMI) showed a reading of 55.1 for March – marking a 13-month high
Dobson said: ‘The survey is 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.’
A number of firms, including Dyson and Honda, have already unveiled plans to up sticks and retreat from Britain this year.
Sterling popped higher on the results as investors chose to focus on the positives, but, according to Cheetham, this is unlikely to provide a lasting boost.
Meanwhile in Germany, manufacturing activity plummeted to an 80-month low last month as weak demand continued to hurt German goods producers.
IHS Market PMI readings for Germany showed that manufacturing activity fell to 44.1