Manufacturing output falls at joint-steepest pace in four years - CBI Industrial Trends Survey - May 2025

Manufacturing output volumes fell in the three months to May, at the joint-steepest pace since August 2020, according to the CBI’s latest monthly Industrial Trends Survey (ITS). Looking ahead, output is expected to fall further over the three months to August.

Total order books weakened marginally in May, relative to April, while export order books improved from a sharply negative reading last month. But both total and export order books remain well below their long-run averages. Manufacturing firms reported that stock adequacy for finished goods was largely unchanged from last month, with the balance standing close to the long-run average.

Expectations for selling price inflation over the coming quarter were broadly similar to last month, remaining above the long-run average.

 The survey, based on the responses of 281 manufacturers, found:

• Output volumes fell in the three months to May at the joint-steepest pace since August 2020 (weighted balance of -25%, the same as in December 2024, and down from -2% in the quarter to April). Manufacturing firms expect output volumes to decline again in the three months to August (-14%).
  • Output decreased in 13 out of 17 sub-sectors in the three months to May, with the fall in output being driven by the metal products, food, drink & tobacco and mechanical engineering sub-sectors.
• Total order books were reported as below “normal” in May (-30% from -26% in April). The level of order books remained far below the long-run average (-14%).
• Export order books were also below “normal” but improved relative to last month (-29% from -41%). The balance still stands below the long-run average (-18%).
• Expectations for average selling price inflation in May were broadly similar to last month (+26% from +23%). Expectations remain above the long-run average (+7%).
• Stocks of finished goods were reported as more than “adequate” in May (+10% from +13% in April), with stock adequacy standing close to the long-run average (+12%).

Ben Jones, CBI Lead Economist, said:

“Sentiment among UK manufacturers seems poor, reflecting a combination of rising domestic business costs and US tariff uncertainty. Many respondents to the survey reported a reluctance to spend among their customers.

“Although there are some bright spots, notably aerospace and renewable energy, the sector as a whole is reporting that their order books remain weak, and this is expected to weigh on output volumes through the summer.

“While the government has taken steps to boost UK competitiveness on the global stage by striking trade deals with India, the US and a UK-EU reset, more action is needed to shift the dial.

“Businesses are facing pressure from high energy costs, rising labour costs and the threat of extra regulation with the Employment Rights Bill coming down the track. Government must avoid further burdening business while simultaneously building confidence through the launch of an innovative Industrial Strategy.

“At a time of heightened global economic uncertainty this could really help to promote the UK as an attractive and stable environment for investment, which is critical for driving long-term, sustainable growth.”