GB: CBI Industrial Trends

Highlights

The latest industrial trends survey indicates a challenging environment for the UK manufacturing sector, with order books deteriorating to their weakest level since September 2020 and output contracting at the fastest pace since the height of the pandemic. The broad-based decline across 12 of 17 manufacturing sub-sectors suggests that the slowdown is structural rather than isolated, reflecting subdued domestic demand, weakening export markets and persistent business uncertainty.

Although manufacturers reported some easing in selling price expectations, inflationary pressures remain well above historical norms, indicating that elevated energy, labour and input costs continue to constrain profitability. At the same time, finished goods inventories remain more than adequate, pointing to a mismatch between production capacity and demand and raising the risk of further output reductions in the coming months. The deterioration in export order books also highlights the sector's vulnerability to slowing global trade and geopolitical disruptions.

While the reopening of the Strait of Hormuz offers hope for lower energy costs and improved supply chains, its benefits are unlikely to materialise immediately. Instead, firms are prioritising resilience through inventory accumulation, supplier diversification and operational efficiency rather than productive investment. Consequently, the UK manufacturing sector faces a prolonged period of subdued growth, with weak confidence, political uncertainty and high operating costs continuing to weigh on investment, productivity and international competitiveness.

Definition

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.

Description

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

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