UK industrial orders continued to fall in January 2026, though the decline was the smallest since September. Despite this, price expectations surged to their highest point in nearly three years, according to the Confederation of British Industry (CBI). The CBI’s monthly order book balance rose to -30 in January, from -32 in December, indicating a modest improvement in industrial activity. However, the index remains well below its long-term average of -14.
Price Expectations Hit 3-Year High
The survey found that price expectations for UK manufacturers have soared to +29, the highest level since February 2023. This sharp increase follows the aftermath of the energy price shock caused by Russia’s invasion of Ukraine. Ben Jones, senior economist at CBI, highlighted the continuing struggles manufacturers face with rising costs, from wages and high energy prices to taxes. These pressures are pushing firms to raise prices, even as demand for products remains subdued.
Challenging Conditions for UK Manufacturers
Despite a small improvement in the order book balance, Jones stressed that conditions for UK manufacturers are still “extremely tough.” As companies battle rising production costs, many are planning price increases to protect their margins. The impact of these cost pressures on competitiveness is a key concern, and manufacturers are still dealing with high energy prices and uncertainty about future demand.
A Slight Improvement in Optimism
Although overall conditions remain challenging, a quarterly question in the CBI survey revealed that manufacturers have grown somewhat more optimistic about their business situation. The business situation gauge rose to its highest point since July 2024, suggesting a degree of confidence in the near-term outlook.
The data points to a difficult but slightly improving environment for UK manufacturers, with many still struggling to balance price pressures and demand constraints.
The latest CBI report signals that while the road ahead remains tough for UK manufacturers, some hope is emerging as firms adjust to the ongoing challenges in the industrial sector. UK industrial orders.
