UK manufacturing PMI hits a 3-month low of 52.8 in Jan., a big miss

The UK manufacturing sector made a lacklustre start to 2019, the latest survey report from IHS Markit showed this Friday. 

The seasonally adjusted IHS Markit/CIPS UK Purchasing Managers’ Index (PMI) retreated sharply from the previous month's six-month high and fell to a three-month low of 52.8 in January.

Key Points:                

   •  Stocks of purchases rise at the survey-record rate.
   •  Employment falls for only the second time in past 30-months.

Rob Dobson, Director at IHS Markit, commented on the survey: “The start of 2019 saw UK manufacturers continue their preparations for Brexit. Stocks of inputs increased at the sharpest pace in the 27-year history, as buying activity was stepped up to mitigate against potential supply-chain disruptions in coming months. There were also signs that inventories of finished goods were being bolstered to ensure warehouses are well stocked to meet ongoing contractual obligations."

“Despite the temporary boost provided by clients’ prepurchases and efforts to build-up stocks, the underlying trends in output and new orders remained lacklustre at best. Growth of new order inflows slowed sharply, and new export orders were near-stagnant, contributing to the weakest trend in output since the month following the EU referendum (July 2016). Based on its historical relationship against official data, the January survey is consistent with a further solid contraction of production volumes, meaning manufacturing will likely act as a drag on the economy in the first quarter."