Factories rush to stockpile for Brexit

UK factories stockpiled goods for Brexit at an unexpectedly high rate last month, boosting manufacturing growth to a 13-month high, according to a closely watched survey.

The research, by IHS Markit/CIPS, found that the rate of increase in stocks hit a survey record high for the third month in a row.

The Purchasing Managers’ Index (PMI) for the manufacturing sector rose to 55.1 in March, from 52.1 in February.

A figure above 50 indicates expansion.

The PMI has remained above that benchmark for 32 months in a row.

However, Rob Dobson, director at IHS Markit, warned that the boost to the UK economy could prove short-lived.

He said: “Manufacturers are already reporting concerns that future trends could be constrained as inventory positions across the economy are unwound.

“The survey is also 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.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the rise in the manufacturing PMI in March largely reflected producers rushing to complete work before the Brexit deadline, rather than a strengthening of underlying demand.

He added: “We continue to doubt that precautionary stockpiling for a no-deal Brexit will boost GDP, because manufacturers primarily are buying imports and are tying up cash that otherwise might have been used for investment.

“All told, then, the PMI should not instil any confidence about the near-term outlook for the manufacturing sector.”