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LONDON (Reuters) – British factories posted their fastest growth in nearly three years last month, as they stockpiled raw materials and scrambled to complete work before new post-Brexit customs rules go into effect on January 1. , showed a poll Tuesday.
The IHS Markit / CIPS Purchasing Managers Index rose to 55.6 in November from 53.7 in October, its highest level since December 2017 and above a previous flash reading of 55.2, offsetting a bleaker picture of other sectors hardest hit by COVID.
“The looming end of the Brexit transition period … led to increasing levels of input purchasing, raw material storage, and higher profits in new export business as EU customers advanced orders,” the company said from IHS Markit data.
Britain and the EU have so far failed to reach an agreement to allow duty-free trade from January 1, and even with an agreement, many exporters fear prolonged delays at ports due to new customs requirements.
“It is therefore highly uncertain whether the rebound in manufacturing output can be sustained into the new year, especially as the temporary buying impulses and the build-up of Brexit stocks subside,” said the director of IHS Markit, Rob Dobson.
November saw the largest increase in commodity purchases since March 2019, the largest increase in export orders since January 2018, and the largest boost to optimism since 2014.
Factory production, which is only one component of total PMI, also accelerated. But it showed slower growth than during the summer, as the second wave of COVID cases reduced demand for some consumer goods, with new orders falling the most in six months.
The most recent official data showed that manufacturing production in September was almost 8% lower than a year earlier, similar to the rest of the economy.
Manufacturing also continues to see job losses, and the PMI shows factories cut staff for the 10th consecutive month, the longest decline since the 2008-09 recession after the global financial crisis.
Reporting by David Milliken; Edited by Catherine Evans
