Economy: Purchasing Managers’ Index

Baroness Kramer Excerpts

Thursday 11th April 2019 Lords Chamber

[Lord Bates]

I absolutely agree with the first part of the noble Lord’s question. I am sure it is noted on his Front Bench. We have been clear that we believe the best way forward for manufacturing—in fact, for the whole economy—is to leave the European Union with a deal, and that is what the Prime Minister is working towards.

[Baroness Kramer (LD)]

My Lords, I fear that some of your Lordships, and perhaps the Minister, must have missed out some of the sentences in Markit’s report on the PMI. It said that, increasingly,

“Companies stepped up production to build-up inventories”,


of,

“both purchases and finished products”,

in advance of Brexit—in other words, stockpiling. It later says that business sentiment “remained subdued” looking ahead, amid persistent Brexit concerns. The CBI this morning confirmed its view that the economy is down 1% to 2% from where it would have been without Brexit. Do the Government believe that underestimating the issues facing industry in any way helps industry to handle this Brexit crisis?

[Lord Bates]

I do not dispute that there are headwinds and that uncertainty is bad for business, which is why we want to resolve matters and move forward. However, one of the points about the purchasing managers’ index is that it asks people what their future intentions are, so if people had been “stockpiling” from the beginning of the year, that would not explain why they are now saying that they believe that they will buy more goods and are more positive about the future outlook. So that is not necessarily the right way to read the numbers.