UK manufacturing upturn slows as new export business falls
Brexit stock-building continued, albeit to a lesser extent than in the prior survey month.
The headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) fell to 53.1 in April, down from March's 13-month high of 55.1.
Alongside weaker growth in production, new orders and stocks of purchases, the lower PMI level also reflected job losses in the sector.
The main theme in UK manufacturing in recent months has been accelerated stockpiling in preparation for Brexit, culminating with the survey-record increases in both inventories of inputs and finished products in March.
This process largely continued into April, with further substantial expansions to holdings signalled.
However, the delay to the UK's departure date meant that rates of increase in both stock measures eased.
Output growth slowed from March's ten-month high in April.
Rates of expansion eased sharply in the intermediate and investment goods sectors, in contrast to a mild acceleration at consumer goods producers.
The upturn in new work received also weakened, as domestic market conditions remained subdued and new export business contracted.
April saw overseas demand decrease at the second-fastest pace in the past four-and-a-half years.
Brexit uncertainty was the main factor underlying the decrease according to companies.
There was mention of some clients re-routing supply-chains away from the UK and of their inventory holdings already being relatively high following recent stock-building activity.
Slower global market conditions also contributed, with reports of lower demand from the EU, the USA and China.
Manufacturing employment declined for the third time in the past four months during April.
Job losses were attributed to natural wastage, improved efficiency and workforce restructuring.
However, the rate of reduction was only mild, as some firms raised employment to meet current and expected future production requirements.
Business optimism improved to a seven-month high in April, with over 50% of companies forecasting that output would increase over the coming year.
The confident outlook was attributed to expansion plans, new product launches, use of new technologies, marketing strategies and an improved operating environment.
However, some firms noted ongoing concerns about Brexit uncertainty (including the timing) and the possible impact of future destocking at clients on demand and production moving forward.
Average purchasing costs rose in April, mainly due to higher commodity, energy, oil and raw material prices.
Output charges also increased.
That said, rates of inflation in both price measures were weaker than in March. ■