UK manufacturing orders stay weak as firms warn of price rises and output dip

• Manufacturing orders remained well below average in February.
• Firms expect output to fall over the next three months.
• Price pressures remain elevated across the sector.

UK manufacturing orders remained subdued in February, with firms continuing to face weak demand and persistent cost pressures, according to the latest CBI industrial trends survey. The data adds to the mixed signals around UK manufacturing and UK economic outlook, with businesses reporting caution despite some pockets of resilience.

The closely watched survey found that order books stayed well below long-term averages, while most manufacturers expect to raise prices and see output decline over the coming months.

The CBI said its monthly order book balance stood at -28 in February, slightly better than -30 in January but still well below the historical average of -14. The figures suggest demand remains soft as customers continue to hold back on spending.

Cameron Martin, senior economist at the Confederation of British Industry, reportedly said, as quoted in a news report, that many firms are seeing customers delay orders amid low confidence and ongoing cost pressures.

Factory output also declined in the three months to February, with the balance improving to -14 from -25 in January. Manufacturers expect production to fall at a broadly similar pace over the next three months, indicating little sign of a quick turnaround.

The survey is based on manufacturers reporting whether conditions are better, worse or unchanged across several areas, with results expressed as a net balance.

Price pressures refuse to ease

Price expectations remained elevated, with the gauge for expected prices over the next three months at +26, easing slightly from +29 in January — the highest level since February 2023 during the energy price shock following Russia’s invasion of Ukraine.

The findings come against a backdrop of wider uncertainty in the UK economy. Households have been described as feeling downbeat about their finances, while companies across sectors continue to cut staff as they grapple with rising costs. At the same time, some business surveys have pointed to improving optimism since the start of the year as uncertainty around the autumn Budget began to fade.

Manufacturing accounts for about 9 per cent of the UK economy, and the Labour government has identified removing barriers to growth in the sector as a priority, arguing it can play a key role in supporting long-term economic expansion.

In June, the government announced a new industrial strategy that includes plans to invest £2 billion over four years to help reduce energy costs for thousands of manufacturing businesses.