In the latest results from the CBI Industrial Trends Survey (ITS), Manufacturing output declined in the quarter to October, matching the previous quarter’s pace. New orders, both domestic and export, fell sharply – the fastest since July 2020 – and are expected to drop further. Business confidence and investment intentions weakened, while competitiveness deteriorated.
Throughout this report, please note that while it is labelled as “October,” this refers to the publication month. Responses were collected between 24 September and 13 October, meaning the results primarily reflect conditions in September. Accordingly, the three-month periods align with calendar quarters: Q3-25 for current-period questions and Q4-25 for forward-looking questions.
The fall in output volumes was broadly based, with 14 of the 17 sub-sectors seeing a reduction in the 3 months to October. The CBI report notes that the main drivers of the trend were “metal products”, “metal manufacture” and “electronic engineering”.
Total new orders fell sharply over the quarter, with domestic and export orders declining at their fastest pace since early in the pandemic. Manufacturers expect further falls in the three months to January. Order book levels were the dominant constraint on output for the next quarter, cited by 73% of respondents.
Optimism about the general business situation continued to decline in October compared with the previous three months. Export sentiment for the year ahead also weakened for the fifth consecutive quarter. Manufacturers reported a deterioration in their competitiveness across all major markets during the three months to October.
Stocks of raw materials remained broadly unchanged. However, stocks of work in progress declined over the three months to October, alongside the steepest fall in finished goods inventories in five years. Manufacturers expect stocks across all three categories – raw materials, work in progress, and finished goods – to continue falling in the three months to January.
This is one of the longer quarterly surveys, including questions on investment intentions and capacity utilisation. As promised, we’re providing an update on these key indicators, which featured prominently in the forecasts released yesterday at our seminar.
Manufacturers’ investment appetite has weakened sharply, with spending plans down across all categories due to weak demand, poor returns, and limited internal finance. Planned investment in plant and machinery is set to drop steeply (including an anticipated fall of -57% for transport equipment), while the share of firms investing to expand capacity has fallen to its lowest since the 2009 and early-1980s recessions. Employment also declined at the fastest rate in five years.
The main measure of capacity utilisation is the percentage of firms working below capacity and this declined slightly to 73% in October (from 75% in July), while the 4-quarter moving average eased down to 74% (from 76% in July). However, there is another question in the CBI survey that asks if firms have adequate capacity to meet expected demand – this increased to 94, its highest level since “January 2021” (in reality, Q4-2020).
The CBI press release on these survey results is available on their website at https://www.cbi.org.uk/media-centre/ (23 October) or we can let you have a copy of the summary of the results and some charts around the investment intentions data.