UK manufacturers reported a marked improvement in order books during August, with export demand returning to normal levels for the first time in more than four years, according to the latest Industrial Trends Survey from the Confederation of British Industry (CBI).
The total order-book balance rose to -25% from -45% in July, its strongest reading since November 2024. The figure remains below the long-run average of -14%, so the survey still points to subdued demand overall, but the 20-point monthly improvement gives manufacturers a materially stronger pipeline than they reported at the start of the summer.
Export order books improved more sharply, rising from -33% in July to 0% in August. That was the first time since June 2022 that manufacturers, in aggregate, regarded export orders as normal for the time of year. Chemicals, electrical goods, and other manufacturing were among the sectors contributing to the improvement, giving the recovery a broader base than a single large order or one customer market.
Current production has yet to follow the same direction. Output volumes fell in the three months to August, with a weighted balance of -17%, although the decline was less severe than the -24% recorded for the three months to July. Twelve of the 17 manufacturing subsectors reported lower output, with metal products, food, drink and tobacco, chemicals, and electronic engineering among the main drags.
Manufacturers also expect output to decline again in the three months to November, producing a balance of -7%. That remains negative, but it is a less pessimistic reading than earlier in the year and leaves open the possibility that stronger incoming orders will begin to feed through to production schedules as existing inventories and customer lead times adjust.
Finished-goods stocks were regarded as more than adequate, with the balance easing to +15% from +19% in July. The reading is still slightly above its long-run average, which reduces the immediate need to raise production simply to rebuild inventories. Factories therefore enter the autumn with a stronger order pipeline, but without the stock pressure that would force an abrupt increase in output.
Pricing expectations have strengthened at the same time. The balance of manufacturers expecting domestic selling prices to rise over the next three months increased to +22%, from +11% in July and against a long-run average of +8%. That creates a less comfortable backdrop for any recovery in volumes because higher labour, energy, transport, and imported-input costs can restrict the margin available to turn better demand into investment or additional capacity.
Other manufacturing indicators have also improved without yet producing a clean break from the recent slowdown. July purchasing managers’ data showed UK factory output expanding at its fastest rate for almost two years, while official production figures have pointed to growth across the second quarter despite monthly volatility. The CBI survey measures a different sample and period, but the direction of August orders adds another positive signal to that mixed picture.
The gap between incoming work and current production is normal after a weak period. Orders can recover before factories increase shifts, material purchases, recruitment, or maintenance activity, particularly where businesses still hold sufficient finished stock or remain unsure how durable the demand will be. Suppliers further down the chain may therefore see the improvement later than the headline order balance suggests.
Export demand will be especially important during the next few months. A sustained improvement would spread the recovery beyond domestic customers and support sectors such as chemicals, electrical equipment, machinery, and other engineered products with significant international exposure. One neutral export reading does not establish a trend, but ending a sequence of below-normal readings that stretched back to June 2022 gives August more weight than a routine monthly fluctuation.
The survey was based on responses from 273 manufacturers, giving the August reading a broad industrial base rather than a narrow snapshot of one subsector. As ever with balance surveys, the figures measure the proportion reporting conditions above or below normal rather than the absolute volume of orders in factory books.
The next CBI readings will show whether the stronger pipeline survives into the autumn and begins to lift actual production. August has removed some of the gloom from UK manufacturing order books, but the combination of falling output, adequate stocks, and firmer price expectations still leaves factories with good reason to treat the improvement cautiously.
