U.K. manufacturing PMI unexpectedly firmed in March, contrast to the expectations of a decline. The headline measure of the survey rose sharply to a thirteen-month high of 55.1, as compared with the expectations of a drop to 51.2.
Some of the recovery was linked to rebounded new business flows from both domestic and export markets. But IHS Markit stated that the overarching influence behind the outsized recovery in manufacturing sentiment was led by companies’ stepping up preparations for Brexit. Stockpiling continued to be a prominent theme with the indices for firms’ inventories of raw materials and finished goods rising at their most rapid rates since the survey started in 1992.
With strength in the latter showing attempts by both manufacturers and clients to build stocks in preparation for Brexit, this provided a supportive backdrop for current activity with the pace of growth in production, new orders and headcount accelerating in March. To the degree that much of the rebound in activity last month is Brexit-related, a further rebound in precautionary stockpiling has the potential to provide some additional support to the sector in the near term, noted Lloyds Bank in a research report.
Beyond that, the outlook for the sector rests greatly on the direction that the Brexit negotiations take. Forward-looking indicators continued to make a generally downbeat assessment of the manufacturing sector’s longer-term prospects.
“Although business optimism improved in March, the overall level of sentiment remains low by historic standards. Not surprisingly, uncertainty around the UK’s departure from the EU and the future relationship remained the main factor weighing on optimism at a number of firms”, stated Lloyds Bank.
At 14:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at -43.0276 while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 31.9133 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
