Manufacturing Stabilisation? Why the Slowing Decline Could Signal a Q2 Turnaround

New CBI data suggests the worst of the manufacturing slump may be behind us. While output fell for a second quarter, the pace of contraction has nearly halved, signalling a manufacturing stabilisation. This could offer a window of opportunity for proactive B2B sales teams.

The UK manufacturing sector is showing signs of finding its “floor.” While output volumes fell in the three months to February 2026, the data reveals a significant trend: the decline is slowing rapidly.

The latest CBI Industrial Trends Survey shows output at -14%, a marked improvement from the -25% recorded in January. For businesses serving the sector, this “less-bad” news is the first step toward a broader recovery in late 2026.

The “V-Shape” Potential: Output Contraction Halves

The most encouraging takeaway from the survey of 305 manufacturers is the velocity of the improvement. A 11-point jump in the output balance suggests that while the sector isn’t growing yet, the “freefall” has stopped.

What this could mean for your pipeline:

• Stabilisation: Your clients are no longer in “crisis mode.”

• Planning: Manufacturers are shifting from reactive survival to mid-term forecasting.

• Forecasts: With output expected to settle at -12% through May, the trajectory is moving toward a flat, and eventually positive, line.

• Order Books: Resilience Amidst Pressure

Total order books were reported at -28%, an improvement from -30% in January. While still below the long-run average, the steadying of both domestic and export orders indicates that global demand is beginning to level out.

For B2B suppliers, this is the time to re-engage on paused projects. When order books stop falling, manufacturers begin to look at the “top of the funnel” again.

Strategic Tip: Focus on “efficiency-first” solutions. Manufacturers aren’t necessarily ready for massive expansion, but they are ready for investments that make their current -14% output more profitable.

Sector Bright Spots: The Growth Leaders

While 13 of 17 sub-sectors saw declines, four sub-sectors are actively growing. In a tightening market, your sales strategy should be a “flight to quality.” By identifying the segments outperforming the average, B2B teams can prioritize resources where budgets are still liquid.

Growth Strategy for Q2

• Identify the outliers: Look for sectors decoupled from the general decline (e.g., green tech or specialist electronics).

• Leverage Stock Adequacy: With finished goods stocks at +14%, focus on helping clients manage inventory turnover rather than just selling more “stuff.”

Price Inflation: A Slow Cooling

Expectations for average selling price inflation dropped to +26% (down from +29%). While still high, the downward trend is a relief for the entire supply chain.

As price volatility eases, the “wait and see” approach from customers typically begins to thaw. If the upcoming Spring Forecast includes the energy cost support requested by the CBI, we could see a surge in purchasing confidence by Q2.

The “Spring Thaw” Sales Playbook

CBI Senior Economist Cameron Martin Cameron Martin, CBI Senior Economist, said: “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. The Spring Forecast is an opportunity for the government to build momentum behind its growth mission and restore confidence.

Manufacturers want to see the government focused on accelerating Industrial Strategy delivery, addressing skills shortages, and lowering the cost of doing business by bringing forward energy costs support. Tackling punitive energy costs will strengthen competitiveness, ease cost of living pressures, and help boost demand across the economy.”

How to position yourself for a potential recovery

• Offer “Recovery-Ready” Terms: Use flexible payment structures to help clients bridge the gap between now and the Q3 upswing.

• Highlight Margin Protection: Show how your service helps them protect their bottom line while they wait for demand to return.

• Monitor the Turn: The jump from -25% to -14% is a leading indicator. Don’t wait for the data to hit 0% before you start aggressive prospecting.

The Verdict: A Sector Primed for a Pivot

The Q1 2026 data isn’t a story of failure, it’s a story of resilience. The manufacturing sector is grinding through the gears, and the slowing decline suggests the engine is starting to catch.

Suppliers who recognise this stabilisation early will be the first in line when “below normal” order books return to growth.