The CBI Industrial Trends Orders index for November 2025 stands at -37, a marginal improvement from October’s -38 but still signaling contraction. This figure remains well below the 12-month average of -31, underscoring persistent weakness in UK manufacturing demand. The index has fluctuated between -26 and -38 over the past year, reflecting ongoing challenges in global supply chains, subdued domestic investment, and cautious business sentiment.

Drivers this month

• Export orders remain weak amid global demand slowdown.
• Domestic orders slightly improved due to government infrastructure spending.
• Input cost pressures continue to weigh on new order volumes.

Policy pulse

The reading remains far below the neutral zero mark, indicating contraction. The Bank of England’s recent rate hikes to combat inflation have tightened financial conditions, likely dampening investment appetite in manufacturing.

Market lens

Immediate reaction: GBP/USD depreciated 0.30% within the first hour post-release, reflecting concerns over industrial demand weakness. UK 2-year gilt yields edged lower by 5 basis points, signaling cautious investor sentiment.

The CBI Industrial Trends Orders index is a leading indicator of manufacturing activity and broader economic momentum. Its persistent negative readings align with subdued UK GDP growth forecasts, which currently hover around 0.50% for Q4 2025. Inflation remains sticky at 4.20% YoY, complicating the Bank of England’s monetary policy stance.

Monetary Policy & Financial Conditions

Following a series of 25 basis point hikes, the Bank of England’s base rate now stands at 5.25%. Tighter monetary policy has increased borrowing costs, reflected in rising corporate bond spreads and a cautious lending environment. This has constrained capital expenditure in manufacturing, contributing to weak order books.

Fiscal Policy & Government Budget

The UK government’s fiscal stance remains moderately expansionary, with a £15 billion infrastructure package aimed at boosting domestic demand. However, fiscal tightening pressures remain due to elevated debt levels, limiting the scope for broader stimulus.

External Shocks & Geopolitical Risks

Global supply chain disruptions persist, exacerbated by ongoing tensions in Eastern Europe and trade frictions with China. These external shocks have increased input costs and delivery delays, negatively impacting order volumes.

Historical comparisons reveal that the index has not breached -40 since mid-2023, suggesting that while conditions are tough, they have not deteriorated to crisis levels. The index’s persistent negative territory contrasts with the post-pandemic rebound seen in 2022, highlighting the shift in economic momentum.

Market lens

Immediate reaction: UK equity futures dropped 0.40% after the print, reflecting investor caution. The FTSE 100 index showed a mild retracement, while the GBP weakened against the USD and EUR, consistent with concerns over industrial demand.

Looking ahead, the UK manufacturing sector faces a mix of headwinds and potential tailwinds. The baseline scenario projects a slow recovery in orders over the next six months, supported by government infrastructure projects and easing supply chain constraints. However, risks remain tilted to the downside.

Scenario analysis

• Bullish (20% probability): Global demand picks up sharply, inflation moderates, and monetary policy eases, pushing the index toward -15 by mid-2026.
• Base (55% probability): Gradual improvement with orders stabilizing around -30, reflecting steady but subdued growth and persistent cost pressures.
• Bearish (25% probability): Prolonged geopolitical tensions and tighter financial conditions push the index below -40, deepening contraction.

Structural & Long-Run Trends

Long-term challenges include the UK’s transition to a low-carbon economy, automation, and reshoring of supply chains. These factors may initially depress orders but could enhance competitiveness over time. The manufacturing sector’s adaptation to these trends will be critical for sustained growth.

The November 2025 CBI Industrial Trends Orders report highlights ongoing contraction in UK manufacturing demand, tempered by a slight improvement from October. Monetary tightening, fiscal constraints, and external shocks continue to weigh on the sector. However, government infrastructure spending and easing supply chain issues offer some relief. Market reactions suggest cautious optimism but underscore vulnerability to global risks. Forward-looking scenarios emphasize the importance of policy calibration and external developments in shaping the sector’s trajectory.

Since 2020, the CBI Industrial Trends Orders index and GBPUSD have shown a moderate positive correlation. Periods of improving orders often coincide with GBP appreciation against the USD, reflecting stronger UK economic prospects. For example, the rebound in orders in early 2022 aligned with GBPUSD rising from 1.30 to 1.38. Conversely, sharp drops in orders during mid-2023 coincided with GBP weakness. This relationship underscores the index’s role as a barometer for UK economic health and currency valuation.