U.K. Factory Index Climbs to 13-Month High on Brexit Stockpiling

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U.K. manufacturers intensified stockpiling last month as they prepared for Brexit.

IHS Markit’s Purchasing Managers Index rose to 55.1 in March, the highest since February 2018, from 52.1 the previous month, the firm said on Monday. Inventories reached record levels, though optimism remained subdued.

The delay to the U.K.’s departure from the European Union may prolong the uncertainty. Companies surveyed by Markit said that future output will be constrained when stockpiling unwinds.

“Manufacturers reported a surge of business activity in March as companies stepped-up their preparations for potential Brexit-related disruptions,” said Rob Dawson, a director at IHS Markit. “The stock-building boost introduces a major headwind for demand, output and jobs growth moving forward.”

Output, new orders and stocks of purchases all surged. Employment showed expansion for the first time in three months. Nevertheless, the survey also showed signs that EU companies are switching away from U.K. suppliers.

“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,” Dawson said.

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