Record stockpiling at UK factories

Will Green is news editor of Supply Management
1 February 2019

Stockpiling at factories increased at the fastest pace in almost 30 years, according to the latest PMI.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index showed a sharp rise in purchasing and stockpiling at warehouses as firms prepared for Brexit.

The index dropped to a three-month low of 52.8 in January, down on 54.2 in December and against the no-change reading of 50, as the sector faced a “clear risk of sliding into recession”.

Rob Dobson, director at IHS Markit, said: “Stocks of inputs increased at the sharpest pace in the [survey’s] 27-year history, as buying activity was stepped up to mitigate against potential supply chain disruptions in coming months.

“There were also signs that inventories of finished goods were being bolstered to ensure warehouses are well stocked to meet ongoing contractual obligations.”

Dobson said Brexit and signs of a European slowdown showed “there is a clear risk of manufacturing sliding into recession”.

The rate of increase in new work from domestic sources eased, while growth in new export business slumped to almost stagnation. The slight increase in foreign demand was linked to the US, Europe, Brazil and Canada.

For intermediate and investment goods, new business flows decreased, while there was solid growth in consumer goods.

Duncan Brock, group director at CIPS, said: “Brexit blight strikes again with the weakest performance in manufacturing production since July 2016 and optimism withers away under the weight of uncertainty as the UK teeters on the edge of departure from the EU.

“Supply chains were closer to breaking point with stretched capacity and delivery times lengthening again for the 33rd month. This begs the question of how much longer suppliers can deliver and businesses can retain stocks for every eventuality.”

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