UK manufacturing output decline eases as demand remains weak: CBI

The survey showed a weighted balance of -21 per cent for output volumes in the three months to December, improving from -30 per cent in the quarter to November. Looking ahead, firms expect output to decline at a balance of -17 per cent in the three months to March.

Weakness remained broad-based across the sector. Output fell in 15 out of 17 manufacturing sub-sectors during the period, with chemicals, metal products, and mechanical engineering recording the sharpest declines. The data highlighted continued pressure on core industrial segments amid subdued domestic and global demand.

Order books showed modest improvement but remained well below historical norms. Total order books were reported as below ‘normal’ in December, with the balance improving to -32 per cent from -37 per cent in November.

Despite the monthly uptick, order levels were still significantly below the long-run average of -14 per cent. Export order books followed a similar pattern, improving to -27 per cent from -31 per cent a month earlier, but remaining weaker than the long-run average of -19 per cent.

Stock levels showed signs of easing, though inventories remain elevated. Stocks of finished goods were reported as more than ‘adequate’ at +8 per cent in December, down from +16 per cent in November and slightly below the long-run average of +12 per cent.

This suggests that while excess inventories are gradually being worked down, stock overhangs continue to weigh on production decisions.

Expectations for average selling price inflation strengthened sharply in December, with the balance rising to +19 per cent from +7 per cent in November. This reading stood well above the long-run average of +8 per cent, indicating that manufacturers continue to face cost pressures that are increasingly being passed on.

“Manufacturing output is still falling, but the pace of decline has eased. Activity was clearly held back by uncertainty ahead of the Budget, and with that now out of the way firms can look to 2026 with a little more certainty. Significant headwinds remain nonetheless, with demand still soft, high energy, labour and regulatory costs squeezing margins, and uncertainty around key policies and global conditions continuing to weigh on confidence,” said Ben Jones, lead economist at CBI.

“To build momentum through 2026, the government must take action to lower the cost of doing business. This includes expediting and broadening support to tackle punitive industrial energy costs, collaborating to agree balanced solutions on the Employment Rights Bill through secondary legislation, and overhauling regulatory barriers to unlock investment and innovation,” added Jones.

The survey draws on responses from 350 manufacturing companies across the UK.

ALCHEMPro News Desk (SG)