Manufacturing output volumes fell in the three months to December, though at a slower pace than in November – according to the Confederation of British Industry’s latest Industrial Trends Survey (ITS).

The survey, based on the responses of 350 manufacturers, also revealed that they expect volumes to decline at a similar pace in the three months to March.

Total and export order books also improved relative to the preceding month, though they remain historically weak. Stock adequacy eased but manufacturers report that inventories of finished goods remain more than adequate. Expectations for selling price inflation picked up, with the survey balance rising above the long-run average.

CBI Lead Economist Ben Jones said: “Manufacturing output is still falling but the pace of decline has eased. Activity was clearly held back by uncertainty ahead of the Budget, and with that now out of the way firms can look to 2026 with a little more certainty.

“Significant headwinds remain nonetheless, with demand still soft, high energy, labour and regulatory costs squeezing margins, and uncertainty around key policies and global conditions continuing to weigh on confidence.

“To build momentum through 2026, the government must take action to lower the cost of doing business. This includes expediting and broadening support to tackle punitive industrial energy costs, collaborating to agree balanced solutions on the Employment Rights Bill through secondary legislation, and overhauling regulatory barriers to unlock investment and innovation.”