UK Factory Orders Improve Sharply

The UK’s total order book balance improved to -9 in September 2026 from -25 in August, marking the strongest reading since July 2023 and beating market expectations of -34. Export orders also improved, while remaining below “normal” at -9, but well above the historical average of -19. Output fell only marginally, with the balance improving sharply to -4 from -17. Manufacturers expect output to decline slightly again through December, at -6. Selling-price expectations also eased considerably to +12 from +22 in August, moving closer to the long-run average of +8 and suggesting some cooling in cost pressures. However, finished-goods inventories were only just adequate, with the balance falling to +2. The CBI said the data point to tentative stabilisation in manufacturing, but warned that high energy, employment and supply-chain costs continue to constrain firms. It said the upcoming Budget could help support investment and growth by reducing business costs and improving confidence.

The Confederation of British Industry’s monthly industrial order-book balance improved sharply to -25 in August 2026 from -45 in July, marking the strongest monthly increase in more than five years and above expectations of -40. Although the reading still indicates declining orders, the improvement suggests greater resilience in the UK manufacturing sector despite the ongoing economic impact of the Iran conflict. Expectations for factory output also strengthened, while export orders moved into positive territory for the first time since June 2022. However, manufacturers continue to face significant cost pressures. The survey showed that expectations for selling prices increased to +22 from +11 in July, likely reflecting the recent rebound in crude oil prices and renewed concerns over input costs.

The UK’s total order book balance remained at -45 in July 2026, matching the joint-lowest level since September 2020 and falling short of market expectations of -40. Rising costs and weak demand are squeezing manufacturers, forcing them to absorb pressure through tighter margins, reduced investment, and further job cuts. According to the CBI’s quarterly data, cost pressures for manufacturers surged in the three months to July, with unit costs rising at the fastest pace since the three months to October 2022. However, output expectations for the next three months improved slightly, edging up to -30 from -31 in June.