Brexit stockpiling boom ends for UK factories: CBI

British factories suffered the biggest fall in orders this month  since late 2016, gearing down from their rush to stockpile  before the  original Brexit deadline in March and boding badly for the economy in  the second quarter, a survey showed.

The Confederation of British  Industry said on Tuesday its monthly order book balance fell to -10  from -5 in April, below all forecasts in a Reuters poll of economists  and its lowest level since October 2016. 

The CBI’s orders gauge, which is not seasonally adjusted, usually rises in May.

Overall, the survey suggested the boost to manufacturing from the push to stockpile was fading fast.

Factories are now lumbered with the greatest stocks of finished goods since 2009, the CBI said.

Howard  Archer, an economist at the EY ITEM Club consultancy, said the towering  inventories pointed to a “significantly weaker” performance ahead for  the manufacturing sector, which accounts for 10 percent of British  economic output.

“The likelihood is that the manufacturing sector  in particular and the economy overall will take a hit in second quarter  at least while some of the stockpiling that occurred in the first  quarter is unwound,” Archer said.

Earlier this month  the Bank of England forecast quarter-on-quarter growth of 0.2 percent for the  second quarter, less than half the rate in the first three months of the  year.

Just days before Britain was due to leave on March 29,  Prime Minister Theresa May asked the European Union for more time to  negotiate a deal. The Brexit deadline is now Oct. 31.

Finance  minister Philip Hammond warned that politicians pushing for Britain to  leave the EU without a deal would be doing deliberate damage to the  economy.

Separately, the Organisation for Economic Cooperation  and Development raised Britain’s growth forecast to 1.2 percent this year from  0.8 percent previously, matching the forecast for the euro zone, as Brexit was  pushed back.

British manufacturers are still likely to remain wary given a slowing global economy and the risk that trade wars escalate.

British factory export orders fell in May at the fastest rate since July 2016, the CBI said.

“(With)  a sharp decline in order books, it’s clear why manufacturing firms are  so keen to see a swift end to the current Brexit impasse,” CBI economist  Anna Leach said.