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James Smith, Developed Markets Economist at ING, explains that the UK Markit/CIPS manufacturing PMI was fairly uninspiring as it printed a reading of 53.1 for November which was a little better than last month.

Key Quotes

“Interestingly, a slight rise in domestic new orders was the main driver of improvement, helped partly by ‘client stock-building’. It’s not immediately clear how much of this trend is down to Brexit, but we imagine at least some of it can be attributed to firms building up stocks as ‘no deal’ uncertainty rises. The question is – can this continue over the winter?”

“It’s hard to see how far manufacturing firms can go in terms of stockpiling goods/components ahead of March. Warehouse space is already extremely limited, partly because of the growing prominence of internet shopping. According to Savills, the vacancy rate in London is just 3%, and we suspect it is likely to be more constrained for specialist or perishable goods which have more specific storage requirements.”

“We don’t expect the Bank of England to hike before May 2019, and there’s a risk that this date might be pushed back further if the Brexit story goes to the wire.”