UK manufacturing output expected to stabilise amid profitability squeeze

According to the latest quarterly CBI Industrial Trends Survey, UK manufacturing output is projected to stabilise over the next three months following a period of decline that began in mid-2022. While the recent fall in output volumes was broad-based—affecting sectors such as chemicals, metal products, and food, drink, and tobacco—the rate of decline has slowed.

Despite expectations of stable production, manufacturers face significant challenges. Labour shortages are increasing, with skilled labour constraints reaching their highest level since January 2025. Additionally, a squeeze on profitability is expected to continue as domestic selling price inflation remains well below the rate of rising unit costs.

New orders for both domestic and export markets have fallen, and manufacturers anticipate further declines in total orders through January. Due to demand uncertainty, inadequate net returns, and labour shortages, investment intentions for the coming year remain weak, with firms planning to reduce spending on machinery, buildings, innovation, and training.