UK manufacturing slightly increases due to Brexit stockpiling
The PMI index rose in October to its highest level since April
Stockpiling ahead of the postponed October 31 Brexit deadline has limited the contraction in UK manufacturing at the start of the final quarter of the year, according to the IHS Markit purchasing managers’ index (PMI).
The index rose to 49.6 in October 2019 from 48.3 the previous month, its highest level since April and well above market expectations of 48.1 carried out in a Reuters poll. However, the index still remained below the 50 dividing line between growth and contraction.
October’s growth was largely due to companies increasing their stocks as they prepared for the UK’s expected EU departure.
Employment declined for the seventh consecutive month, while firms increased stock-building and purchasing activity also due to the anticipated October Brexit deadline.
The PMI sub-index for stock of purchases rose to 55.57 in October, from 53.64 in September.
October’s PMI data also showed that new business continued to decline, despite the fastest growth in export orders since last December as EU customers stocked up on products from British suppliers.
The UK and Brussels have now agreed to postpone the Brexit deadline until January 31. Britain will meanwhile hold a general election on December 12.
The manufacturing PMI gives a measure of the health of the manufacturing sector and is derived from a survey of 600 industrial companies.