Doomsayers were saying a lot of things about UK manufacturing last month. However, the manufacturing sector smashed all the pessimistic forecasts and ended up recording a 13-month high!
For March, the UK manufacturing reading was 55.1, which was a major jump from the 52.1 reading in February. According to economists and experts, the expected reading was 51.2, but a more bullish reading of 55.1 surprised everyone.
So what's behind this increase in manufacturing? According to some, this jump in manufacturing numbers can be attributed to Brexit stockpiling. A lot of companies have been involved in stockpiling ahead of the original departure date of the UK from the European region.
Stockpiling Of Goods
A lot of car manufacturers from the UK also stockpiled tons of cars due to the uncertainty caused by Brexit. Besides the car industry, manufacturers from pretty much every sector were also involved in the stockpiling of goods. The reason for this was a simple one - They didn't want the business to be disrupted because of the Brexit saga.
According to experts, pretty much all the figures such as new orders, employment, and output are at higher rates. If we look at the PMI (purchasing manager's index), it tells us that both the clients & manufacturers are racing to build their safety stocks.
That's why a lot of experts are also of the view that the strong numbers in March were misleading at best and not sustainable. Because once Brexit is official and the clouds of confusion are gone, manufacturing and stockpiling will stop, and it will be business as usual.
In fact, these healthy figures are actually a warning for the tough times ahead for businesses, especially the manufacturing industry. In fact, the majority of the businesses will shift toward heavy discounting, and there is a possibility that they may be rebuffed by those firms which have turned their back on the UK.
Current Manufacturing Landscape In the UK
Any investments that were made during these periods of uncertainty will most definitely continue to echo through the manufacturing sector. And once the confusion and Brexit preparations are over, we may start to see the decline once again.
A lot of companies such as Honda and Dyson have already prepared their plans to roll back from Britain this year.
Furthermore, the sterling is enjoying a momentary boost as the investors are choosing to focus on the positive numbers rather than the grim situation that's ahead. However, experts believe that this will be short-lived and will fail to provide a long-lasting boost.