Brexit uncertainty contributes to manufacturing’s sharp drop, says report
3 Jul 2019
UK manufacturing levels in May were at their lowest since February 2013 owing to mounting concern over the Brexit impasse, said a leading industry barometer.
HIS Markit and the Chartered Institute of Procurement and Supply said its monthly report revealed the effect of previous stockpiling early in the year.
Head of energy and industrial manufacturing at consultants DWF, Andrew Symms commented: “The underlying data is unfortunately pretty dark. Manufacturing production contracted at the fastest pace since October 2012 and new order inflows deteriorated from both domestic and overseas sources. Employment also fell for the third straight month in June.
“A lack of transparency caused by Brexit ambiguity is holding back investment. Manufacturers need to take positive steps to understand their supply chains, mitigate risks and ensure, to the best of their ability, that financing is available in case conditions deteriorate further.”
The report authors said that firms which had boosted stocks in expectation of the March 29 Brexit deadline had been left overstocked when the date shifted.
“Firms had previously rushed to stockpile goods and materials ahead of the original Brexit deadline on 29 March before Theresa May agreed to push back the date until the end of October," said the authors.
“After providing a boost to economic growth, manufacturers are now either adequately stocked or may run down their supplies, dragging on output.”
However, they added a degree of blame could also be attached to a deteriorating economic backdrop and rising competition, plus weak export demand and a faltering global economy.