CBI Manufacturing Survey February 2026: What Weak Orders Mean for Your Strategy

The latest CBI manufacturing survey paints a sobering picture for UK manufacturing. Published on 19 February 2026, the data confirms what many operations directors already sense. Order books remain well below historical norms. Cost pressures are intensifying. The outlook for the coming quarter is far from optimistic.

But here is the critical question: what should manufacturers actually do about it?

At LeanIQ, we believe data only matters if it drives action. This analysis breaks down the February 2026 CBI manufacturing survey results. We contextualise it against broader economic indicators manufacturing leaders track, and deliver practical recommendations for navigating this challenging environment.

The Headlines: February 2026 CBI Manufacturing Survey in Numbers

Based on responses from 305 manufacturers, the CBI Industrial Trends Survey revealed these key metrics:

UK Manufacturing Orders

• Total order book balance: -28 (up marginally from -30 in January)
• Long-run average: -14
• Export order book balance: -26 (improved from -30 in January)
• Export long-run average: -19

Output

• Output volumes fell at a weighted balance of -14 in the three months to February
• This represents an improvement from -25 in January
• Output declined in 13 out of 17 sub-sectors surveyed
• Manufacturers expect output to decline at a similar pace (-12) in the three months to May

Pricing

• Expected selling price inflation: +26 (down slightly from +29 in January)
• Long-run average: +8
• The +29 reading in January was the highest since February 2023, during the energy price shock

Cameron Martin, CBI Senior Economist, summarised the manufacturing outlook 2026: “The downturn in manufacturing output eased in February, after a downbeat period around the turn of the year. However, many firms continue to report customers holding back amid low confidence and elevated cost pressures.”

Understanding the Divergence: CBI vs PMI Data

Manufacturing leaders may notice an apparent contradiction in recent data. The S&P Global UK Manufacturing PMI rose to 52.0 in February 2026 (up from 51.8 in January), signalling the strongest expansion since August 2024. Meanwhile, the CBI manufacturing survey shows persistent weakness.

How do we reconcile these readings?

The answer lies in methodology and scope:

1. Sample composition: The CBI survey focuses on larger manufacturers (305 respondents). The PMI captures a broader cross-section including SMEs.

2. Question framing: PMI asks about month-on-month changes. CBI asks about quarter-on-quarter movements and positions relative to “normal” levels.

3. SME divergence: Make UK data shows large manufacturers are growing. SMEs have declined for the third consecutive month. The PMI broader sample may capture growth pockets that the CBI larger-company focus misses.

4. Export dynamics: Export orders rose in the PMI for the first time in four years. This is driven by US, China and European demand. This positive signal may not yet flow through to domestic order books that dominate CBI responses.

For manufacturing strategy planning purposes, treat both surveys as complementary. The PMI suggests forward momentum is building. The CBI confirms current UK manufacturing orders remain under pressure. Both can be simultaneously true.

Sector-Level Analysis: Winners and Losers

The CBI manufacturing survey reveals output decreased in 13 out of 17 sub-sectors. The hardest-hit areas include:

Under Pressure

• Metal products: Leading the decline, reflecting broader industrial demand weakness
• Food, drink and tobacco: Consumer cost-of-living pressures flowing through
• Mechanical engineering: Capital expenditure delays affecting orders

Showing Resilience

• Aerospace: Aircraft deliveries hit an 8-year high in 2025 (1,411 units, up 25%). Record backlog of 16,371 aircraft worth up to £269 billion
• Defence: UK defence exports reached a record £20 billion in 2025. Aerospace accounts for 56% of total defence exports
• Motor vehicles and transport: Despite sector challenges, some segments see renewed investment

The UK industrial outlook varies dramatically by sector. Your manufacturing strategy must be calibrated to your specific market position.

The Cost Squeeze: Why Margins Are Under Threat

The elevated selling price expectations (+26) reveal a sector attempting to pass through cost increases. But pricing power is not uniform. The gap between cost inflation and achievable price recovery is squeezing margins across the board.

Three primary cost drivers are compounding:

Employment Costs

From April 2025, the employer National Insurance rate increased to 15% (from 13.8%). The threshold dropped from £9,100 to £5,000 per employee. For a manufacturer with 100 employees earning an average of £35,000, this represents approximately £70,000 in additional annual costs.

The Employment Allowance increase to £10,500 provides some relief for smaller employers. Medium and large manufacturers are absorbing the full impact.

Energy Costs

According to a joint CBI and Energy UK report, business electricity costs remain 70% higher than pre-Ukraine invasion levels. Gas prices are 60% higher. UK industrial electricity prices are almost two-thirds above the IEA median. They are the highest among G7 members.

The promised British Industrial Competitiveness Scheme (BICS) will not arrive until 2027. That leaves 2026 as another year of competitive disadvantage for UK manufacturing.

The impact is measurable. Nearly 40% of businesses report cutting back investment due to energy costs. The UK goods trade deficit widened to a record £248.3 billion in 2025.

Supply Chain Inflation

Employer NI increases are not just hitting manufacturers directly. They are filtering through the entire supply chain. Component costs, logistics rates, and service charges are all rising as suppliers attempt their own cost recovery.

The Strategic Imperative: Six Actions for Manufacturing Leaders

Weak UK manufacturing orders demand strategic response, not passive acceptance. Here are six actions manufacturing leaders should take now:

1. Accelerate Export Market Development

Export orders rose in the PMI for the first time in four years. The UK-China trade reset, with Scotch whisky tariffs halving from 10% to 5%, signals new opportunities. Defence exports hit record levels.

Practical steps:

• Review your export market mix. Are you overly dependent on stagnant domestic demand?
• Investigate sector-specific trade agreements and tariff reductions
• Consider that 42% of manufacturers plan to expand exports in 2026 (Make UK data). Position yourself among them

2. Invest in Automation to Offset Labour Costs

With employment costs rising structurally (NI increases are permanent), the automation business case has shifted. According to Make UK, 76% of manufacturers are investing in digital technologies, AI and automation in 2026.

The calculation is simple. If your annual labour cost increase is £70,000-£200,000 (depending on workforce size), automation investments that previously had 4-5 year payback periods may now return capital in 2-3 years.

3. Prepare for Energy Relief (But Do Not Wait for It)

BICS arrives in 2027, but 2026 requires action now:

• Audit your energy consumption and identify efficiency opportunities
• Investigate on-site generation (solar, battery storage). Payback periods have shortened dramatically
• Lock in favourable energy contracts where possible. Do not assume prices will fall

The CBI is calling for energy support to be brought forward. Even if that happens, preparation now positions you to benefit faster.

4. Review Pricing Strategy

With expected selling price inflation at +26 against a long-run average of +8, manufacturers are pricing aggressively. But blind price increases risk volume loss.

Strategic pricing requires:

• Cost-to-serve analysis by customer and product
• Value-based pricing for differentiated products
• Contractual mechanisms (cost indexation clauses) for long-term agreements
• Customer communication that links price movements to specific, defensible cost increases

5. Scenario Plan for Continued Weakness

The CBI manufacturing survey suggests no immediate recovery in UK manufacturing orders. Manufacturers expect output to decline at -12 in the three months to May.

Scenario planning questions:

• What is your break-even point? How much volume loss can you absorb?
• Which customers or product lines would you exit under sustained pressure?
• What fixed cost reductions could you implement without damaging capability?
• Where are opportunities to acquire distressed competitors or gain market share?

6. Engage with Industrial Strategy Opportunities

The government Industrial Strategy includes £120 billion in planned investment over 10 years. Sector plans for aerospace, defence, clean energy, and advanced manufacturing are creating targeted opportunities.

Practical engagement:

• Monitor BICS eligibility announcements (consultation response due shortly)
• Investigate Made Smarter funding for digital transformation
• Explore defence supply chain opportunities (£75 billion commitment announced)
• Review apprenticeship reforms. £725 million funding and accelerated approval (18 months to 3 months) opens workforce development options

The Bigger Picture: Manufacturing Outlook 2026 Remains Cautiously Optimistic

Despite the weak CBI manufacturing survey data, there are genuine reasons for cautious optimism:

• 65% of manufacturers believe opportunities will outweigh risks in 2026 (Make UK/PwC Executive Survey)
• Four consecutive months of PMI growth suggest underlying momentum
• Export orders rising for the first time in four years indicate demand recovery in key markets
• Aerospace backlog of £269 billion provides multi-year visibility for supply chains
• Record defence exports of £20 billion demonstrate UK manufacturing competitiveness in high-value sectors

The manufacturers who will thrive are those treating this period as a strategic reset. Weak orders create space for operational improvement, strategic repositioning, and competitor displacement.

Conclusion: Data-Driven Action, Not Paralysis

The CBI manufacturing survey February 2026 confirms challenging conditions. UK manufacturing orders sit at -28 versus a long-run average of -14. Output is declining in 13 of 17 sub-sectors. Cost pressures show little sign of easing.

But the same data points to opportunity for those prepared to act:

• Export markets are reopening
• Automation economics have fundamentally improved
• Industrial Strategy support is imminent (if frustratingly delayed)
• Sector variations mean growth remains available in aerospace, defence, and advanced manufacturing

The Spring Forecast will reveal whether government delivers on its growth promises. In the meantime, manufacturing leaders cannot afford to wait. The actions you take in the next 90 days will determine whether weak orders become a structural problem or a temporary challenge you navigated successfully.

At LeanIQ, we work with manufacturing businesses to turn operational data into strategic advantage. If your order books are under pressure, we can help you identify efficiency gains, optimise pricing, and build the operational resilience to weather this period and emerge stronger.

Michael Ashworth is Editorial Director at LeanIQ, where he covers manufacturing strategy, operational excellence, and industrial policy.