Investing.com - Activity in the U.K. manufacturing sector surged unexpectedly to a 13-month high last month as stockpiling ahead of Brexit hit a fresh survey record.
Research firm IHS Markit said its manufacturing purchasing managers’ index rose to 55.1 in March, surprising economists who had forecast a drop to 51.2. That was its strongest level in the last 13 months.
“Manufacturers reported a surge of business activity in March as companies stepped up their preparations for potential Brexit-related disruptions,” IHS Markit director Rob Dobson said.
The U.K. had been due to leave the EU on March 29, but the deadline was extended by two weeks to give the U.K. parliament more time to approve the Withdrawal Agreement negotiated by the two sides. However, the bill failed in the House of Commons for a third time on Friday, while no alternative has yet to get a majority in the House.
Dobson said that output, employment and new orders all rose at increased rates as manufacturers and their clients raced to build “safety stocks” ahead of the U.K.’s upcoming departure from the European Union and noted that stocking of finished goods and input inventories both surged to new survey-record highs.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply that collaborates in the report, referred to the intensified activity as “panic-buying”.
“The big worry is if the threat of uncertainty recedes, businesses will have to resort to heavy discounting on these stocks to free-up valuable operating expenses if normal order levels are not restored in the coming months,” he warned.