Manufacturing PMI: Expansion Cools, but Firms Optimistic on the Outlook

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UK manufacturers saw the rate of business expansion cool over the course of April as export orders declined and they pulled back on efforts to stockpile goods in case of a 'no deal' Brexit, however firms appear to have become increasingly optimistic on the fortunes coming months will bring.

The Markit IHS / CIPS Manufacturing PMI for April read at 53.1, a smidgen off the market forecast for a reading of 53.2.

The figure is however lower than March's bumper reading of 55.1.

A figure above 50 represents growth, therefore the sector remains comfortably in expansion.

According to IHS Markit, April saw the recent growth fillip at UK manufacturers show signs of petering out, as rates of expansion in output and new orders slowed and new export business decreased at the second-fastest pace in four-and-a-half years.

Brexit stock-building continued, albeit to a lesser extent than in the prior survey month.

March saw the UK and EU agree to delay Brexit until October 31, pushing back the date for a potential 'no deal' and lessening the need for companies to stockpile components.

Of note, 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.

“Manufacturers' outlook remained relatively upbeat," says Rob Dobson, Director at IHS Markit. "Companies plan to use new product launches, new technologies and improved marketing strategies to drive growth forward in the coming months."

The positive outlook for UK manufacturers is however counterbalanced by ongoing concerns surrounding Brexit, "Brexit uncertainty continues to weigh on plans, as some firms remain concerned about future growth prospects and the likely impact on output and demand from the unwinding of inventory positions later in the year,” says Dobson.