Manufacturers stockpiling in earnest ahead of Brexit, new PMI survey shows

Commenting on the latest results from the Markit/CIPS PMI manufacturing survey, Mike Thornton, head of manufacturing at RSM said:

'It's very clear that manufacturers are ramping up their pre-Brexit stockpiling activity, with pre-production inventories rising to their greatest extent in the survey's history.

'While manufacturing output was up slightly in February, it's likely that this was largely the result of efforts to build stock of finished products in advance of Brexit.

'Of most concern to manufacturers will be the stagnation in new orders as manufacturers face the double whammy of reduced domestic demand and weakening economic growth in Europe.

'It's notable that there has been a similar deterioration in eurozone manufacturing operating conditions, with February ending a run of growth in the eurozone manufacturing economy that has stretched over the last five and half years.

‘Although the majority of UK manufacturers want to avoid a no deal Brexit, some are preparing for an uplift in domestic activity in the short term should there be delays to imports.

'However, some manufacturers could end up with surplus stock, putting pressure on working capital, stock management and the wider supply chain.

'In common with most business sectors, manufacturers will now be hoping for an end to the political deadlock and the uncertainty as soon as possible.’