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GB: CBI Industrial Trends
| Actual | Previous | |
| Orders Balance | -45% | -45% |
Highlights
UK manufacturing remained firmly in contraction in July 2026, with the order-book balance unchanged at minus 45. This suggests that the sector has yet to establish a meaningful recovery from the stagnation that began in mid-2024. Although the quarterly output balance improved from minus 33 percent to minus 24 percent, activity declined across 13 of 17 subsectors, while expected output weakened to minus 30 percent.
The downturn is principally demand-driven. Total new orders fell at their fastest pace in six years, as both domestic and export demand contracted. Accordingly, 70 percent of firms identified inadequate orders or sales as a production constraint, exceeding the long-run average of 65 percent.
Manufacturers are simultaneously confronting severe cost pressures. The cost balance rose to 65 percent, while weaker pricing expectations indicate that firms cannot fully transfer rising expenses to customers. This imbalance is compressing profit margins, weakening internal finance and discouraging investment in machinery, buildings, innovation and training.
Falling inventories and anticipated employment cuts further indicate defensive business behaviour. Without measures to reduce industrial energy costs, stimulate demand and improve access to finance, the present cyclical contraction risks developing into a sustained loss of productive capacity and international competitiveness.