'Short-lived' Brexit boost for manufacturers as factories begin stockpiling

The manufacturing sector is hit by the double whammy of a new sales and service tax and lower ringgit. – EPA pic

The manufacturing sector is hit by the double whammy of a new sales and service tax and lower ringgit. – EPA pic

The U.S. Purchasing Managers' Index (PMI) survey for December 2018 indicated a slower, albeit still solid improvement in the health of the U.S. manufacturing sector, according to data released by the IHS Markit on Wednesday.

In an early warning sign that GDP growth is set to have nearly stalled in the last three months of 2018, the purchasing managers' index (PMI) showed that subdued demand from cash-strapped consumers also acted as a brake on sales.

This was higher than the 50.4 recorded in November when it hit a 28-month low, and above the 50.7 reading economists were expecting.

"The weakness of the recent survey data, in fact, raises the possibility that the goods producing sector could even act as a drag on the overall economy in the fourth quarter, representing a marked contrast to the growth surge seen this time a year ago".

Results of a Caixin survey on China's manufacturing in December indicated that factory activity contracted for the first time in 19 months amid a trade dispute with the US.

Canadian manufacturers experienced a renewed slowdown in growth at the end of 2018, with both production volumes and incoming new work expanding at softer rates than in November.

"The recent success of Vietnamese manufacturing firms in generating strong new order growth continued in December", said Andrew Harker, Associate Director at IHS Markit, which compiles the survey.

British manufacturers received a "short-lived" boost in December as they ramped up stockpiling ahead of the UK's exit from the world's biggest trading bloc.

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He said we also want to eradicate corruption which will help flourish investment, especially in the small and medium enterprises. The Prime Minister said our main concern is to take people out of poverty and this will be done by promoting wealth creation.

Although down on growth rates seen earlier in 2018, the upturn was solid overall in the year.

A Markit survey of American manufacturers also showed the slowest growth in December in 15 months, reflecting a dip in confidence among executives about how their businesses will perform in the new year.

Mrs May is also seeking to win fresh assurances from the European Union over the terms of her agreement, which is set to be voted on by MPs (BSE: MPSLTD.BO - news) within the next three weeks.

Growth of purchasing activity rebounded slightly from the 11 month low seen during November.

Where a rise in input prices was reported, survey respondents mainly cited greater steel costs.

Williamson also said that the inflationary forces in the United States cooled in December 2018 mainly as lower oil prices helped to alleviate upward cost pressures from tariffs.

Factory gate price inflation slowed for the second month running and reached its lowest point since March, according to the seasonally adjusted Output Prices Index.

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