Commenting on today’s CBI Industrial Trends Survey, Emily Sawicz, Director and Industrials Senior Analyst at RSM UK, said: “Today’s figures show some tentative signs that conditions for UK manufacturers are beginning to stabilise, but the underlying picture remains challenging. Output is expected to be broadly flat over the next three months, and employment is forecast to increase modestly. However, orders are falling and manufacturers continue to face significant pressure on margins.

“The gap between input costs and manufacturers’ ability to pass those increases on is particularly concerning. Costs rose rapidly in the latest quarter, while domestic selling prices struggled to keep pace. This creates a significant margin squeeze, consistent with earlier PMI data showing input cost inflation running ahead of manufacturers’ own selling price increases.

“There is some cause for cautious optimism. Employment was broadly flat for the first time in two years, and manufacturers expect headcount to increase in the coming quarter. However, this comes alongside weakening competitiveness, falling orders and continued uncertainty around demand, all of which weigh heavily on investment intentions.

“The challenge now for the sector lies in turning stabilisation into meaningful growth. Manufacturers need the confidence to invest in capacity and productivity, but elevated costs, export markets challenges and demand uncertain mean businesses are likely to remain cautious until there is greater clarity on the outlook.”

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