Bold claim: UK manufacturing is barely treading water, even as orders stay fragile and costs stay high. But here’s where the nuance matters, and why the next few months will be a make-or-break test for the sector.
Original data shows output for UK manufacturing fell again in the three months to February, but the decline eased compared with January. The Confederation of British Industry’s (CBI) Industrial Trends Survey (ITS) indicates manufacturers expect only a similar pace of decline in the three months to May, underscoring persistent headwinds across the industry.
The ITS drew on responses from 305 manufacturers. It found total and export order books remain unusually weak, while expectations for price inflation remain elevated. In short, demand remains soft, and costs remain a pressure point for many firms.
Output declines span most sub-sectors. The weighted balance for output volumes dropped to -14% in February, an improvement from -25% in January. Looking ahead, firms expect output to fall at a similar rate (-12%) in the next quarter. Thirteen of the 17 sub-sectors reported lower output, with the sharpest drops in metal products, food/drink/tobacco, and mechanical engineering. The broad slowdown reflects weak domestic demand and ongoing supply chain uncertainty, plus cost pressures.
Order books tell a similar story of weakness. Total orders sit well below normal, with a February balance of -28% (slightly better than January’s -30%, but far below the long-run average of -14%). Export orders are also below normal, though a touch better than last month (-26% vs -30% in January), compared with a long-run average of -19%. Cameron Martin, CBI Senior Economist, notes that many firms report customers holding back amid low confidence and elevated costs.
Cost pressures and inflation expectations remain high. Firms reported selling price inflation expectations at a balance of +26% in February, down slightly from +29% in January but still well above the long-run average of +8%. Finished goods inventories are described as “more than adequate,” with a balance of +14%—up from +3% in January and roughly in line with the long-run average of +12%. This suggests companies are stocking up to guard against ongoing supply chain uncertainty and are passing costs to buyers where possible.
Policy angles and the call for government action. The CBI stresses that government policy can help the sector recover. Cameron Martin urges accelerating delivery of the Industrial Strategy, addressing skills shortages, and reducing business costs—especially high energy costs.
He adds: “The Spring Forecast is an opportunity for the government to build momentum behind its growth mission and restore confidence. Reducing energy costs would boost competitiveness, ease living costs, and stimulate demand across the economy.”
Outlook: a fragile picture with a potential for stabilization. The February easing offers a hint of steadiness, but the underlying fragility of UK manufacturing is clear. Weak domestic and export demand, coupled with high costs and inflation, continue to challenge firms. Both manufacturers and economists are calling for swift government action to restore confidence, support investment, and keep the sector competitive on the global stage.
What do you think—will policy changes be fast enough to reverse this trend, or are deeper structural shifts required? Share your thoughts in the comments.
