The CBI Industrial Trends Survey (ITS) published this week shows another fall in output, extending a run that goes back to mid-2024. New orders are also on a falling trend with both home and export demand lower. The percentage of firms “working below capacity” was at its highest since April 2024 and although investment intentions were better than in the October 2025 survey, they remain below long-run average levels.
Throughout this report, please note that while it is labelled as “January” this refers to the publication month. Responses were collected between 18 December 2025 and 12 January 2026, meaning the results primarily reflect conditions in December; similarly, the three-month periods align with calendar quarters with Q4-25 for current-period questions and Q1-26 for forward-looking questions.
The fall in output volumes in the 3 months to “January” was slightly faster than in the same period to “December” and was broadly based with 14 of the 17 sub-sectors seeing a reduction in this survey. The report notes that this decline was led by the “food, drink & tobacco”, “metal products”, “mechanical engineering” and “chemicals” sub-sectors – two of these are key customer for MTA Cluster members. However, it is also worth noting the contrast with the manufacturing output data that we reported on last week, where machinery (called “mechanical engineering” by the CBI) was one of the strongest growing industries.
In parallel with this, the volume of new orders fell sharply and at the fastest pace since July 2020. As noted above, both home and export demand fell and the level of order books was, by far, the most reported factor to be restricting output over the coming quarter. Accordingly, a further deterioration is anticipated for the coming three months for both output and new orders.
Unsurprisingly, business sentiment weakened with manufacturers who responded to the survey saying that optimism about both the business situation and export prospects had declined. However, although negative, these were the least so since July 2024.
This is one of the longer quarterly surveys, including questions on investment intentions and capacity utilisation.
The balance of opinion for investment in plant & machinery was less negative than in the October Survey, although this is not saying much as it was very weak and the current level is still well below the long-run average. There was little change in the drivers of investment other than a recovery in the need to expand capacity back to less exceptional, but still sub-par levels. Similarly, among the constraints to investment, the results were similar to those last October, with “uncertain demand” by far the most reported factor.
There are two ways of looking at capacity utilization and they moved in opposite directions compared to the October Survey. The percentage of firms reporting that they were operating “below normal capacity” increased to its highest level since April 2024. On the other hand, the percentage of “firms with adequate capacity to meet expected demand” fell back from its very high levels in the two previous surveys – this ties up with the rise in the number saying that they needed to invest in expanding capacity that we noted above.
The CBI press release on these survey results is available on their website at https://www.cbi.org.uk/media-centre/ (21 January) or we can let you have a copy of the summary of the results and some charts around the investment intentions data.