Sentiment among UK manufacturers has deteriorated sharply, with optimism about both the business situation and export prospects falling at their fastest rates since the onset of the COVID-19 pandemic, according to the latest quarterly CBI Industrial Trends Survey. Both output and orders declined, as competitiveness in UK markets deteriorated at a record pace.

Manufacturing output fell in the three months to April, and at a faster pace than in the three months to March. The decline was broad-based, but driven by the food, drink & tobacco, chemicals, metal products and mechanical engineering sub-sectors. Firms expect output to fall again in the three months to July. Orders or sales remain the most cited constraint on output over the next three months, with the share of firms citing this broadly in line with the long-run average, while the share citing issues with materials or components jumped to its highest since July 2023.

The volume of total new orders fell in April, reflecting declines in both domestic and export orders. Manufacturers expect the decline in new orders to accelerate, with expectations for the next three months close to the weakest since April 2020.

Cost pressures remain elevated. Growth in average costs per unit of output accelerated in the three months to April, compared with January, and unit costs are expected to rise at the fastest pace for over three years in the coming quarter. Both domestic and export selling prices rose, after being broadly stable in the quarter to January. Selling price inflation is expected to pick up further in the coming quarter, but less quickly than costs inflation, implying an intensifying squeeze on profitability.

Against this backdrop, manufacturers’ investment intentions remain weak. Firms plan to cut spending on buildings, plant & machinery, training (their weakest since April 2020) and innovation over the year ahead, held back by uncertainty about demand and inadequate net returns. Employment declined at the fastest pace since October 2020 over the past quarter, with deeper cuts to headcount expected over the next three months.

Warning signs are flashing in this survey. Sentiment among UK manufacturers is deteriorating at a speed not seen since the pandemic. It's clear that the war in the Middle East is contributing to rising uncertainty, with supply chains beginning to see some renewed strain and cost pressures intensifying.

The UK’s high industrial energy costs were a concern even before the conflict, leaving the manufacturing sector vulnerable to the crisis. And as the squeeze on competitiveness becomes more pronounced, output and orders are weakening, spare capacity is rising and manufacturers are scaling back hiring and investment plans.

The recent announcement to boost clean energy and decouple gas from electricity prices is a welcome step, highlighting the need for a consistent and coordinated approach to energy policy to strengthen industrial competitiveness. The government should now work with business to explore how to remove non-energy ‘policy’ costs from electricity bills, support industrial energy efficiency, and advance renewable infrastructure. Energy security is economic security; by securing the right foundations, we enable manufacturers to invest, compete and grow.

The survey, based on the responses of 276 manufacturing firms, found:

Business sentiment deteriorated rapidly in April, with manufacturers optimism about both the business situation (weighted balance of -65%) and export prospects (-59%) declining. In both cases, the survey balances were their weakest since April 2020.

Output volumes fell in the quarter to April, at a faster pace relative to the quarter to March (-27%, from -23% in the three months to March). The decline in output volumes was broad based (14 out of 17 sub-sectors), driven by declines in the food, drink & tobacco, chemicals, metal products and mechanical engineering sub-sectors. Firms expect output to fall again in the three months to July (-20%).
The share of firms citing orders or sales as a factor likely to limit output in the next three months fell relative to January, standing broadly in line with the long-run average (66%, from 72% in January; long-run average of 65%).
The share of firms citing materials or components as a constraint rose to its highest since July 2023 (30%, from 11%).
The share of firms citing a shortage of skilled labour as a constraint on output over the next three months fell slightly (20%, from 24%), and stands at its lowest since the quarter to January 2021. The share of firms citing a shortage of other labour also fell (4%, from 11%).

Total new orders fell through the quarter at the fastest pace since July 2020 (-22%, from -21% in January), reflecting declines in both domestic orders (-24%) and export orders (-5%). Manufacturers expect the total volume of new orders to decline in the three months to July, at a faster pace (-31%).

The proportion of firms working below capacity stands at its highest since July 2020 (73%, from 70% in January; long-run average of 57%).

Investment intentions for the year ahead are weak. Manufacturers expect to reduce investment in buildings (-38%, from -44%), plant & machinery (-36%, from -22%), training & retraining (-23%, from -17%, the weakest capex intentions since April 2020), and product & process innovation (-14%, from -3%).

The main constraint on investment was uncertainty about demand (cited by 62% of manufacturers), followed by inadequate net return (33%), and a shortage of internal finance (23%).

Average costs rose in the quarter to April at an elevated pace (+54%, from +33% in January; long-run average of +20%). Costs growth is expected to accelerate in the quarter to July (+79%).

Average domestic prices rose in the quarter to April, after being broadly flat in the quarter to January (+16%, from +2% in January), accompanied by a jump in average export prices (+15%, from -4%). Both domestic and export prices are anticipated to rise in the next three months (+32% and +19%, respectively).

Stocks of work in progress fell in the three months to April (-21%, the fastest pace of decline since July 2020), accompanied by falls in stocks of raw materials (-17%, also the fastest pace of decline since July 2020) and of finished goods (-16%).
Manufacturers expect stocks of finished goods (-26%), of raw materials (-18%), and of work in progress (-13%) to all fall in the three months to July.

Numbers employed fell in the quarter to April (-19%, from -16% in January, and the fastest pace of decline since October 2020). Manufacturers expect another fall in employment in the quarter to July (-27%).

Manufacturing competitiveness deteriorated across all major markets in the three months to April. Manufacturing competitiveness in the UK worsened at the fastest pace on record (-23%, from -20% in January). Competitiveness in non-EU markets also worsened (-20%, from -8%), whereas competitiveness in EU markets worsened at a broadly unchanged pace (-10%, from -12%)
Competitiveness is expected to decline again in the three months to July, particularly in UK markets (-33%), followed by EU (-22%) and non-EU (-10%) markets.

The April 2026 CBI Industrial Trends Survey was conducted between 25 March and 13 April, with 276 manufacturing firms responding.

A balance is the weighted percentage of companies reporting an increase minus those reporting a decrease.