Manufacturing Outlook 2025 Q3
15.09.2025
Britain’s manufacturers have seen a sharp rebound in activity this quarter, according to Make UK and BDO's Manufacturing Outlook 2025 Q3 report. After a series of weak periods, output volumes are expanding, export demand is rising, and both investment and recruitment intentions are on the up.
Key findings at a glance
- Output growth: Activity is picking up after a weak Q2.
- Exports driving demand: Overseas orders lead recovery while the UK domestic market also strengthens.
- Stronger confidence: Investment and recruitment plans jump sharply.
- US market recovery: The US regains its position as the second most important growth market.
- Outlook remains uncertain: Despite gains, manufacturing growth is forecast to stay weak into 2026.
Skills Shortages and Cost Pressures
While the rebound is welcome news, skills shortages remain a major challenge. With 46,000 vacancies currently unfilled, the sector is losing an estimated £4 billion in output every year. At the same time, rising costs continue to squeeze manufacturers:
- 70% expect further increases in the upcoming Budget.
- 68% have already faced higher-than-expected costs in the past six months.
- Over half have raised prices this year - with more planning to do so soon.
The Road Ahead
Manufacturers are seeing renewed demand and investment, but growth is set to remain fragile as inflation and skills shortages continue to weigh on the sector.
After a period of considerable uncertainty in global markets, these figures are an encouraging sign that manufacturers’ confidence is improving and, more importantly, being translated into growth and investment. However, one swallow doesn’t make a summer, and with UK and European markets in particular remaining anaemic it wouldn’t take much to knock prospects for further growth.
“It’s therefore essential that manufacturers’ fears of further costs as a result of the forthcoming Budget aren’t realised. Government has made great strides in backing manufacturing with its industrial strategy and it must avoid imposing any further cost burdens which will hamper its number one mission of boosting economic growth.
These latest findings offer a glimmer of hope for the manufacturing sector. Despite what has been a relentless year by all accounts, manufacturers have somehow boosted their output and doubled down on their investments to match.
“But this reprieve could be short lived. The spectre of the upcoming Budget looms and the sector will need robust signalling from the government that their investments are worth the risk. All eyes will be on the Autumn Budget and it’s vital that the government seizes this opportunity to prove their commitment to the sector and to the promises made in the Industrial Strategy.
