UK manufacturing output is expected to stabilise over the next three months, according to the latest CBI Industrial Trends Survey. This follows a decline in the three months to October, extending a period of broadly flat or falling production that began in mid-2022.
The latest fall in output was widespread, with particularly sharp declines in food, drink & tobacco, chemicals and metal products. However, the pace of decline eased compared with the average so far this year, and manufacturers expect production to remain broadly flat through to January. Labour availability remains a growing concern, with the proportion of firms citing shortages of skilled workers reaching its highest level since January 2025. Constraints from other labour shortages also rose to their highest since mid-2022.
New orders fell in October, although at the slowest rate since April 2025, as both domestic and export demand weakened. Manufacturers expect orders to decline again over the coming quarter at a similar pace. Competitiveness also deteriorated across all major markets, adding to the challenges facing the sector.
Cost pressures remained elevated, with unit costs rising rapidly again in the three months to October. Domestic selling prices continued to increase, although at a slower pace than in July, while export prices were unchanged. Manufacturers expect domestic price inflation to pick up over the coming quarter, but selling prices are still expected to rise much more slowly than costs, pointing to continued pressure on profit margins.
Against this backdrop, investment intentions remain weak. Manufacturers expect to reduce spending on plant and machinery, buildings, innovation and training over the year ahead. Uncertainty over demand, inadequate expected returns and labour shortages are holding back investment, with labour availability cited as a constraint by the highest proportion of respondents in two years.
There was, however, a more positive signal from the labour market. Employment was broadly unchanged in the three months to October, marking the first time in two years that manufacturers had not reported a decline in headcount. Firms also expect employment to edge higher over the next three months.
The survey was conducted between 25 September and 13 October, with responses from 263 manufacturers.
You can get the Press Release of the CBI Industrial Trends Survey from their website at http://www.cbi.org.uk/media-centre (22 October) or request it from MTA.