Manufacturing PMI: Expect this downward trend to continue for the next three months

Following the release of the UK manufacturing PMI, Atul Kariya, head of manufacturing and engineering at MHA MacIntyre Hudson, has said that the purchasing index is artificially propped up by stockpiling and actual orders and investment remain weak.

“It’s no surprise that today’s index shows a decline in activity and the downward trend is liable to continue, probably for the next three months at least,” he said. “Actual orders are down and so is capital expenditure which is crucial for long term productivity growth. There’s no doubt Brexit has caused a delay in many major investment decisions manufacturers would have otherwise taken.

“The index continues to show manufacturing growth but this is almost entirely a result of stockpiling, which is the product of Brexit uncertainty not underlying strength in the industry. The appearance of health is therefore quite artificial as it’s the Brexit contingency measures themselves that are masking the underlying weaknesses Brexit has caused.

“A key question for the future will be how long the artificial boost from stockpiling will last. Companies will be loath to halt the strategy until Brexit is resolved but over time, if extensions keep happening, this will become unsustainable.

“So far, given the great difficulties Brexit poses for UK manufacturing firms, with their complex supply chains and dependence on international trade flows, the industry as a whole has held up better than might be expected. We can only hope this resilience continues until Brexit is resolved.”

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