Britain’s manufacturers have recorded a sharp rebound in activity in the third quarter of the year, with rising export demand, revived investment, and increased recruitment intentions all pointing to renewed confidence across the sector.

According to the latest Q3 Manufacturing Outlook survey from Make UK and BDO, the bounce comes after a series of weaker quarters, with encouraging signs that pent-up investment demand is finally being released. The survey shows output volumes have expanded sharply, supported by export orders leading the recovery, while the domestic market has also shown improvement.

Recruitment intentions have climbed notably, yet the sector’s skills gap continues to take a heavy toll. Make UK warns that the inability to fill around 46,000 current vacancies is costing UK manufacturing an estimated £4bn in lost output each year.

Despite the stronger performance, growth projections remain cautious. Make UK forecasts that manufacturing output will still fall by -0.1% in 2025 and -0.6% in 2026, underlining the fragility of the recovery.

Encouragingly, the United States has reclaimed its place as the second most favoured growth market after a sharp fall in Q2 due to earlier tariff uncertainties. This marks a return to form, with export optimism once again leading the charge.

But challenges persist. A significant 70% of manufacturers expect further cost increases in the upcoming Autumn Budget, compounding already severe price pressures. More than two-thirds (68%) say their costs have risen more than expected over the past six months. In response, over half (58%) have already raised prices this year, with a further 53% planning to do so in the next six months – pointing to inflationary pressures still very much in play.

Commenting, Stephen Phipson, Chief Executive at Make UK, said:

“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.”

Richard Austin, Head of Manufacturing at BDO, added:

“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.”

Survey Figures at a Glance:

• Output balance: up to +25% (from +9% in Q2)
• Total orders: up to +16% (from -2%)
• Export orders: rise to +23% (from +7%)
• UK orders: recover to +12% (from -1%)
• Recruitment intentions: up sharply to +15% (from +1%)
• Investment intentions: jump to +25% (from +2%)

The outlook for capital investment is particularly positive. Nearly 70% of manufacturers say they plan to invest in technology and automation, underlining a continued shift towards innovation and productivity.