Manufacturing Outlook 2025 Q2
16.06.2025
For the first time, the United States has dropped out of the top three growth markets for UK manufacturers - overtaken by Asia/Oceania and the Middle East - as export optimism fades in the face of tariffs and rising uncertainty.
This is according to Make UK and BDO's Manufacturing Outlook 2025 Q2 report, published today, which also finds that 6 in 10 companies expect their export volumes to the US to be hit.
Furthermore, nearly a third of companies are rethinking their supply chains, with over a quarter exploring new markets - while just 4% plan to invest in US manufacturing.
In other news, output volumes have grown following a contraction last quarter, while - US-exports aside - overall export orders have recovered, though domestic orders are negative.
Employment levels remain stable, with investment trending sharply downwards and manufacturing growth forecasts have been cut sharply for 2026, after already being negative for 2025.
While at first glance the headline numbers may not look too bad, manufacturers are facing a gathering storm of huge uncertainty in one of their major markets, a skills crisis and eye watering energy costs which are providing a harsh reality for many.
“In response, it’s absolutely essential that the forthcoming industrial strategy takes bold measures to bring down the cost of energy and takes equally bold action to ensure companies can access the people they need to take advantage of a more competitive landscape. If these two issues are not addressed, then we will face the serious prospect of the UK accelerating into de-industrialisation.
This quarter’s results are a testament to the increasingly challenging landscape our British manufacturers are operating in. The forecasted decline in growth is concerning and the delayed industrial strategy won’t help to assuage uncertainty in the sector.
"That said, there remains pockets of positivity. Growing output levels are proof of manufacturer’s resilience and last month’s trade deals should remove barriers as UK companies seek new trading partners and opportunities for growth. As always, they need urgent clarity and targeted investment from the government if this recovery is to continue into next quarter.
