The CBI's latest industrial trends survey highlights a worsening sentiment in the manufacturing sector, with confidence declining at the fastest rate in over two years and orders balance continuing in negative territory at minus 34 percent. While manufacturing output fell less sharply in the quarter to January than in the previous quarter, it is expected to decline further by April. The volume of new orders, particularly exports, has plummeted, with the sharpest decline since July 2020. Alarmingly, 79 percent of manufacturers cite weak order books as a critical factor limiting output, a share not seen since the early pandemic.

Cost pressures are mounting (43 percent, from 25 percent in October), with growth in average costs accelerating sharply and expectations for further increases at their highest in over two years. Although price inflation for domestic and export sales was muted, manufacturers predict rapid rises by April. Investment intentions have deteriorated significantly (minus 42 percent, from minus 21 percent in October), with spending on buildings, machinery, innovation, and training set to drop. This contraction is driven by demand uncertainty, poor net returns, and restricted access to internal financing.

Labour market conditions also reflect this downturn (minus 8 percent, from 7 percent in October). Manufacturing headcount declined slightly in January and is expected to fall further, marking the fastest rate of job losses since July 2020. Overall, the sector faces compounded challenges of weak demand, rising costs, and declining investment confidence, leaving the UK RPI at minus 26 and the RPI-P at minus 31, meaning that economic activities are generally behind expectations of the economy.

The Confederation of British Industry (CBI) produces a monthly survey (and a more detailed quarterly report) analysing the performance of UK manufacturing industry. This is the UK's longest running qualitative business tendency survey. Questions relate to domestic and export orders, stocks, price and output expectations with the main market focus being the domestic orders balance. The survey is seen as a loose leading indicator of the official industrial production data.

Started in 1958, this is the UK's longest-running private sector qualitative business tendency survey. The survey is used by policy makers along with those in the business community, academics and top analysts in financial markets. One of its key strengths is that it is released within ten days and prior to official statistics and includes data not covered by official sources. It is never revised. The data are also used by the European Commission's harmonized business survey of EU countries.

Frequency
Monthly and quarterly