The Confederation of British Industry's (CBI) monthly net balance of new orders improved to -28 in February 2025 from -34 in January, surpassing market expectations of -30.
UK factory orders gauge above expectations
This marks a slight improvement in the manufacturing sector, though conditions remain challenging. Looking ahead, manufacturers are showing increased optimism, anticipating a modest rise in output volumes over the next three months leading to May. However, total order books remained significantly below their long-term average (-36), reflecting continued weak demand, while export orders remained largely stagnant (-36 vs. -38 in January), suggesting persistent global trade headwinds.
Selling price inflation expectations eased
On the pricing front, selling price inflation expectations eased compared to the previous month, but they remained above historical norms, indicating that cost pressures, though moderating, continue to affect manufacturers. Meanwhile, production declined across 16 of 17 sub-sectors, with the sharpest contractions observed in glass & ceramics, building materials, and metal manufacturing, underscoring widespread weakness across key industrial segments.
Expert comment
CBI’s lead economist, Ben Jones, attributed the prolonged downturn to weak domestic and international business confidence, exacerbated by ongoing global economic uncertainties and subdued investment. However, he noted that firms expect a gradual recovery, partly driven by the necessity to rebuild depleted inventories. Jones also underscored the importance of government support in fostering long-term growth, calling for a comprehensive industrial strategy, targeted skills reforms, and measures to address persistent challenges such as high operational costs and energy price volatility. Despite near-term difficulties, the outlook suggests cautious optimism as firms look to stabilize and rebuild momentum in the coming months.
