Manufacturing output volumes fell in the three months to November, and at the fastest pace since August 2020 – according to the Confederation of Business Industry’s latest Industrial Trends Survey (ITS).
To make matters worse, manufacturers also expect volumes to decline at a similar pace in the three months to February 2026 while the volume of total order books was stable at a historically weak level in November.
Export order books improved relative to last month but remained well below average. Stock adequacy for finished goods rose, to stand above the long-run average.
Expectations for selling price inflation eased in November, standing in line with the long-run average.
The survey, based on the responses of 334 manufacturers, found output volumes fell at an accelerated pace in the three months to November (-30%, from -16% in the quarter to October), which saw the sharpest decline since the three months to August 2020. Manufacturers expect output volumes to fall at a similar pace in the three months to February (-30%).
Output decreased in 13 out of 17 sub-sectors in the three months to November, with the fall being driven by the food, drink and tobacco, chemicals and mechanical engineering sub-sectors.
Expectations for average selling price inflation eased in November (+7%, from +16% in October), to stand in line with the long-run average.
Stocks of finished goods were reported as more than “adequate” in November (+16%, from +7% in October), with the balance standing marginally above the long-run average (+12%).
Ben Jones, CBI lead economist, said: “Manufacturers face a challenging end to the year. What’s striking in this month’s survey is how consistently firms link the slowdown to uncertainty ahead of the Budget, with customers delaying purchases and investment until they know what’s coming.”
Alpesh Paleja, the CBI’s deputy chief economist, added: “Growth expectations weakened in November, some of which may be down to jitters ahead of the Budget. Businesses tell us that much of the month passed in limbo ahead of that, with big discretionary spending and investment on hold.
“However, this only compounded the headwinds to growth that have been apparent throughout the year: cautious spending behaviour by households and clients making demand conditions tepid, against a backdrop of persistent cost pressures for corporates.”
While the Budget is likely to add further costs to businesses, notably with the addition of NICs to salary sacrifice pension contributions, the fiscal headroom created may provide some stability going forward.
Alpesh said: “The government must now leverage enterprise expertise to unlock economic growth. This starts by applying the effective model of compromise and partnership achieved on the Employment Rights Bill, by collaborating directly with business to boost growth.”