LONDON, 3 Dec. (Reuters) – – The Brexit approach was felt in British factories in November as companies supplied parts to counter border delays and exports suffered a rare contracture.
PHOTO FILE: A worker examines an aluminum component inside the factory of Precision engineering company Produmax in Shipley, Britain on May 8, 2018. REUTERS / Phil Noble
The IHS Markit / CIPS Manufacturing Purchasing Managers (PMI) index rose to 53.1 from 51.1 in October, the weakest reading since the Brexit referendum.
Although the index turned out to be stronger than any forecasts of a survey by Reuters economists, it was still one of the lowest since voters decided to leave the European Union in June 2016.
The stock-building, as well as the launches of new products, helped the new orders to grow after a rare contraction in October.
Many manufacturers are building inventories of parts to protect themselves from the risks of customs delays at the border when Britain leaves the EU on March 29th.
A separate survey released at night by a group of producers also found that British companies were increasing their inventory levels while export demand declined.
Prime Minister Theresa may risk seeing the Brexit plan agreed with other EU leaders – which includes a transition period to free Britain from the bloc – rejected by parliament in a vote on December 11th.
IHS Markit said that the new export business fell for the second consecutive month in November, the first back-to-back contraction from early 2016, and companies reported the uncertainty of Brexit as a of the main reasons for the fall.
The optimism among the producers fell to a minimum of 27 months.
IHS Markit director Rob Dobson said the survey suggested that manufacturing production is likely to contract in the fourth quarter of 2018, unless there is a rebound in December.
The British economy has slowed down from the Brexit referendum in 2016, but not from that predicted by many forecasts at the time of the vote. Last week, the Bank of England and the finance ministry said that in any scenario, Brexit's economy would have grown slower than it would have been if Britain had stayed in the EU.
William Schomberg's writing; Editing by Toby Chopra