Buying rises unexpectedly
Stockpiling rises as firms prepare for Brexit border delays
The latest IHS Markit/CIPS Manufacturing Purchasing Managers’ Index rose unexpectedly to 54.2 in December from an upwardly revised 53.6 in November, the highest reading in six months.
Markit said the improvement was caused in large part by manufacturers stockpiling and a pick-up in new orders to a 10-month high as both domestic and foreign clients looked to guarantee their own supplies amid increased concerns of potential Brexit disruptions
IHS Markit director Rob Dobson said: “Any positive impact on the PMI is likely to be short-lived, however, as any gains in the near-term are reversed later in 2019 when safety stocks are eroded or become obsolete.”
Despite the December improvement, the manufacturing PMI still suffered the weakest quarterly performance in the fourth quarter of 2018 since the third quarter of 2016, immediately after the Brexit referendum result.
EY’s Item Club said this maintained its view that UK GDP growth is likely to have slowed markedly to 0.3% quarter-on-quarter in the fourth quarter from 0.6% quarter-on-quarter in the third quarter.