CBI Industrial Trends Survey, January 2025
This survey is the only UK manufacturing business survey with a supplementary quarterly release for Small and Medium-Sized Enterprises (SMEs) – the SME Trends Survey.
The supplement provides insight into business conditions for smaller manufacturing firms. Capturing business sentiment in the way it does the survey provides a powerful early signal to inform forecasts of the economic outlook of the UK’s manufacturing sector.
The survey, based on the responses of 343 manufacturing firms, found:
- Output volumes fell in the quarter to January, after falling at their steepest pace in four years in December (weighted balance of -13%, from -25% in the three months to December). Firms expect volumes to fall again in the three months to April (-19%).
- Output fell in 12 out of 17 sub-sectors, with declines in the glass & ceramics, timber & wooden products, furniture & upholstery, and plastic products sub-sectors driving the decline.
- Total new orders fell in January, and more rapidly than the previous quarter (-20% from -13% in October). Domestic orders fell at a similar pace as the previous quarter (-20%, from -22%), but firms reported an accelerating decline in the volume of new export orders (-23%, from -11%, and the weakest since July 2020). Manufacturers expect the volume of new orders to fall at the fastest pace since the beginning of the pandemic in the three months to April (-32%, from -11% in October).
- Business sentiment deteriorated in January, at the fastest pace since October 2022 (-47%, from -24% in October). Export optimism for the year ahead also fell sharply (-41%, from -16%).
- Investment intentions for the year ahead weakened significantly compared to October. Manufacturers expect to reduce investment in buildings (-42%, from -21% in October), in plant & machinery (-41%, from -12%), in product & process innovation (-26%, from 0%, and the weakest since 2009), and in training & retraining (-14%, from -3%).
- The main constraint on investment was uncertainty about demand (cited by 46% of manufacturers), followed by inadequate net return (33%), and a shortage of internal finance (22%). Concerns around labour shortages have steadily declined for three years and now stand close to the long-run average (14%; long-run average of 11%).
- Average costs rose in the quarter to January, at an accelerated pace (+43%, from +25% in October; long-run average of +19%). Costs growth is expected to remain elevated in the quarter to April (+58%, which were also the strongest expectations since October 2022).
- Average domestic prices were broadly unchanged in the three months to January (+2%, from +10% in October). Export prices fell for a second consecutive quarter (-5%, from -7% in October). Both domestic (+27%) and export (+16%) prices are expected to rise in the next three months.
- Stocks of raw materials (+3%), of work in progress (-1%) and of finished goods (-2%) were broadly unchanged in the quarter to January.
- Manufacturers expect stocks of raw materials (-19%), of finished goods (-14%), and of work in progress (-12%) to fall over the quarter ahead, and at the fastest pace in four years.
- Numbers of people employed fell in the quarter to January, after having risen in the quarter to October (-8%, from +7% in October). Firms expect numbers employed to fall again in the quarter to April (-18%, the weakest expectations since July 2020).