UK manufacturing activity hit a six-month high in December as companies took steps to protect supply chains amid heightening fears of a no-deal Brexit.

The closely-watched CIPS (Chartered Institute of Procurement & Supply) purchasing managers’ index (PMI) rose to 54.2 in December, up from 53.6 in November. It came as stronger inflows of new business and an increase in stock purchases were linked to manufacturers and clients preparing for the possibility of a no-deal Brexit.

The UK is scheduled to leave the European Union (EU) on March 29. However the continuing absence of a withdrawal agreement rubber-stamped by the Westminster Parliament has raised fears that trade will be seriously disrupted after that date.

According to the CIPS survey, Brexit uncertainty influenced manufacturers’ purchasing activity, stock levels and business confidence in December. Input buying volumes increased as companies put plans in place to reduce potential supply-chain disruption, with input inventories rising at the fourth-highest rate in the report’s 27-year history.

Manufacturers attributed a sharp rise in stocks of finished goods in December to Brexit. The rate of increase was the second-strongest since the survey began in 1992, beaten only by the expansion seen in May 2018.

However, despite December’s increase in manufacturing activity, the average PMI reading in the fourth quarter of 2018 was the weakest since the third quarter of 2016, which was the first quarterly survey to be carried out in the immediate aftermath of the vote to leave the EU. The average posting during 2018 was 53.9, down from 55.9 in 2017.

Howard Archer, chief economic adviser to the EY ITEM Club, said manufacturing weakness seen during 2018 reaffirmed its view that GDP growth is likely to have slowed to 0.3% quarter-on-quarter in the fourth quarter, from 0.6% in the third quarter.

Mr Archer said manufacturers are concerned the UK could leave the EU without a deal in March. He added that, while moves to guarantee supply chains may support manufacturing activity in the first quarter, the underlying picture looks challenging for the sector. Conditions are notably challenging at home, he said, where there is heightened caution over investment and expenditure on capital goods amid uncertainties, particularly Brexit.

Rob Dobson, director at IHS Market, which compiles the survey, said: “December saw the UK PMI rise to a six-month high, following short-term boosts to inventory holdings and inflows of new business as companies stepped up their preparations for a potentially disruptive Brexit.

“Stocks of purchases and finished goods both rose at near survey-record rates, while stockpiling by customers at home and abroad took new orders growth to a ten-month high. Any positive impact on the PMI is likely to be short-lived, however, as any gains in the near-term are reversed later in 2019 when safety stocks are eroded or become obsolete.

“The trend in production volumes remained lacklustre despite the safety stock-building, with the latest survey consistent with a mild decrease in the official measure of manufacturing output over the final quarter. Uncertainties regarding Brexit disruption on supply chains and the exchange rate are also weighing on business confidence. Although manufacturers forecast growth over the coming year, confidence remains at a low ebb. Manufacturing will therefore be entering 2019 on a less than ideal footing with Brexit uncertainty having intensified considerably.”