Brexit: Manufacturers stockpiling at record pace

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UK manufacturers prepared for Brexit by stockpiling raw materials at a record pace last month, a closely-watched survey has suggested.

The research, by IHS Markit/CIPS, found companies were stockpiling goods at the fastest pace in the survey’s 27-year history.

Employment in the sector fell, and the survey warned that export orders were “near-stagnant”.

It added that there was a risk of the sector slipping into recession.

Overall, the survey’s Purchasing Managers’ Index fell to 52.8 from 54.2 in December. While the figure above 50 still implies activity in the sector is expanding, IHS Markit/CIPS said manufacturing had made a “lacklustre” start to the year.

“The start of 2019 saw UK manufacturers continue their preparations for Brexit,” said Rob Dobson, director at IHS Markit.

“Stocks of inputs increased at the sharpest pace in the 27-year history, as buying activity was stepped up to mitigate against potential supply-chain disruptions in coming months.

“There were also signs that inventories of finished goods were being bolstered to ensure warehouses are well stocked to meet ongoing contractual obligations.”

The report referred to some supply chains as being “closer to breaking point”

It noted there had been “a marked slowdown” in the growth of new orders, and those companies that did report an increase in output “mainly linked this to stock-building activity”.

“January also saw manufacturing jobs being cut for only the second time since mid-2016 as confidence about the outlook slipped to a 30-month low, often reflecting ongoing concerns about Brexit and signs of a European economic slowdown,” said Mr Dobson.

“With neither of these headwinds likely to abate in the near-term, there is a clear risk of manufacturing sliding into recession.”

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