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UK CommentUK manufacturing PMI improves in November, but underlying weakness intensifies

  1. Production lifted by stockpiling on Brexit fears
  2. Export orders continue to fall
  3. Sentiment still points to decelerating output growth
Production lifted by stockpiling on Brexit fears
UK manufacturing PMI strengthened slightly in November to 53.1 from 51.1 in October. The consensus expectation was 51.7. According to the survey, output growth improved, as did overall new orders, but export orders continued to decline. Future output expectations also fell further and companies cited ongoing global trade tensions, reduced client interest from overseas as well as Brexit uncertainty. The overall degree of optimism dipped to a 27-month low, according to the survey. According to a newly released survey from the manufacturers’ trade body, EEF, UK manufacturers are currently making as many goods as possible and piling them up in storage in response to fears of raw materials drying up in the event of a no-deal Brexit. According to EEF, precautionary stockpiling has allowed firms to maintain higher production levels, despite a pronounced drop in export orders. The PMI survey also confirmed that some of the increase in domestic new orders and production was related to stock-building.
Sentiment still points to decelerating output growth
Despite the improvement in the PMI manufacturing index in November, its level was still among the weakest recorded over the past two years. The PMI output index is still suggesting actual manufacturing output growth will weaken ahead.



Source: Macrobond


Kari Due-Andresen

Chief Economist Norway

Norway and UK

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