Manufacturing Output Set to Stabilise After Sharp Falls, CBI Survey Shows

UK manufacturers report worst quarterly decline since 2025 but expect conditions to flatten by summer amid easing price pressures.

Manufacturing output volumes plummeted in the three months to March 2026, falling at the sharpest pace in nearly a year. The CBI Industrial Trends Survey recorded a weighted balance of -18%, down from -12% in the quarter to February.

But there’s hope on the horizon. Output expectations improved to -2% for the quarter to June 2026, up from -12% in the previous month — the least pessimistic outlook in 12 months.

The Numbers Tell the Story

Fourteen out of 17 manufacturing sub-sectors reported declining output, with the decline driven by glass and ceramics, building materials, and electrical goods sub-sectors.

Total order books remained stubbornly below normal levels at -27% in March, barely improved from February’s -28%. These figures sit well below the long-run average of -14%.

Export orders provided a rare bright spot, improving to -14% from February’s -26%. This actually beats the long-run average of -19%.

Price Pressures Begin to Ease

Selling price inflation expectations dropped sharply to +12% in March from +26% in February. The figure remains slightly above the long-run average of +8% but signals manufacturers expect cost pressures to moderate.

Stocks of finished goods were reported as more than adequate, with a balance of +16% in March compared to +4% in February, now standing above the long-run average of +12%.

Cameron Martin, CBI Senior Economist, said: “There are signs that conditions are beginning to stabilise for manufacturers, with falling output expected to bottom out and selling price growth anticipated to slow.”

Challenges Remain

Manufacturers still face significant headwinds. The Middle East conflict continues to push up energy costs while threatening supply chain disruptions.

Weak customer confidence persists amid broader economic uncertainty. Order books remain at historically low levels despite the marginal improvement.

The survey reflects conditions during March 2026, when UK industry grappled with persistent weak confidence and elevated energy costs.

What This Means for Kent Residents

Kent’s manufacturing sector — above all food processing around Medway and engineering firms in the Thames Gateway — faces similar pressures to the national picture. Local workers in these industries should monitor company announcements about production schedules and potential job impacts. Households can expect some relief from product price increases as manufacturers’ cost pressures begin to ease, though energy bills may remain elevated due to global conflicts. Kent businesses should engage with local enterprise partnerships and Kent County Council support schemes designed to help manufacturers deal with these challenging conditions.

Key Takeaways

• Manufacturing output fell sharply in Q1 2026 but should stabilise by summer
• Export orders showed improvement while domestic demand remained weak
• Price inflation expectations dropped markedly as cost pressures begin to moderate