UK manufacturing output fell in the three months to February, although the rate of decline eased compared with January, according to the Confederation of British Industry’s (CBI) latest Industrial Trends Survey (ITS).
Manufacturers expect output to continue falling at a broadly similar pace in the three months to May, highlighting ongoing challenges across the sector.
The survey, based on responses from 305 manufacturers, also showed that total and export order books remain historically weak, while expectations for selling price inflation stayed elevated.
Output Declines Across Most Sub-Sectors
The weighted balance for output volumes fell to -14% in February, improving from -25% in January.
Looking ahead, manufacturers anticipate output will drop at a similar pace (-12%) in the next quarter.
Output decreased in 13 of the 17 sub-sectors, with the steepest declines seen in:
- Metal products
- Food, drink, and tobacco
- Mechanical engineering
This broad-based slowdown reflects weak domestic demand and ongoing uncertainty over supply chains and costs.
Orders and Export Performance
Total order books remain below normal, with a weighted balance of -28% in February, marginally better than January’s -30%, but still considerably below the long-run average of -14%.
Export orders also remained below normal, though slightly improved from the previous month (-26% from -30% in January), compared with a long-run average of -19%.
“Many firms continue to report customers holding back amid low confidence and elevated cost pressures,” said Cameron Martin, CBI Senior Economist.
Rising Costs and Elevated Inflation Expectations
Manufacturers reported elevated expectations for selling price inflation, with a balance of +26% in February, slightly down from +29% in January but still well above the long-run average of +8%.
Stocks of finished goods were reported as “more than adequate,” rising to +14%, up from +3% in January, and broadly in line with the long-run average of +12%.
This suggests that firms are holding higher inventory levels to manage supply chain uncertainty, while passing on cost pressures to buyers where possible.
Calls for Government Action
The CBI highlighted the role of government policy in supporting the sector’s recovery. Cameron Martin urged the government to accelerate delivery of its Industrial Strategy, address skills shortages, and reduce the cost of doing business, particularly by tackling punitive energy costs.
“The Spring Forecast is an opportunity for the government to build momentum behind its growth mission and restore confidence. Tackling energy costs will strengthen competitiveness, ease cost-of-living pressures, and help boost demand across the economy,” Martin said.
Outlook
While the easing in February offers a glimmer of stability, the survey underscores the fragility of the UK manufacturing sector. Weak domestic and export demand, combined with high costs and inflationary pressures, continue to challenge businesses. Manufacturers and economists alike are urging swift government action to restore confidence, support investment, and ensure the sector remains competitive in the global market.
