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Manufacturers stockpiling at record high

Manufacturers stockpiling at record high

With Easter just around the corner it is not unusual for confectionery manufacturers and suppliers warehouses to be bursting at the seams with chocolate. But this year it is different, businesses that don't consider Easter as a peak are stockpiling too.

As the prospect of a no-deal Brexit looms with just three weeks until the deadline, 'nearly every square metre' of warehouse space in the country is now full in preparation, according to Business Minister Richard Harrington

Many businesses have been building supplies of raw materials and finished goods to minimise disruption to their supply chains. As a result, the latest IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index reported stockpiling of inputs rose to a survey-record high, continuing from January.

The uncertainty surrounding Brexit withdrawal arrangements combined with decreased trade has caused businesses to cut back on employment. According to the PMI job losses were at a six-year high across the consumer, goods sector and at SME and large enterprises.

This contributed to an increase in manufacturing output as companies tried to reduce backlogs of work and build stocks of complete products. 

Rob Dobson, director at IHS Markit, said: “With Brexit day looming, UK manufacturers continued to implement plans to mitigate potential disruptions. Stockpiling of both inputs and finished products remained the order of the day, with growth in the former hitting a fresh record high.

“The current elevated degree of uncertainty is also having knock-on effects for business confidence and employment, with optimism at its lowest ebb in the survey’s history and the rate of job losses accelerating to a six-year high.

“Official data confirm that manufacturing is already in recession, and the February PMI offers little evidence that any short-lived boost to output from stock-building is sufficient to claw the sector back into growth territory.”

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