UK Manufacturing Productivity Index

Q1 2026 Update

Aerospace boom drives marginal increase in UK manufacturing output as inflation fears rise

According to FourJaw’s analysis of the latest Office for National Statistics (ONS) data, UK manufacturing output increased by 1.4% (£2.2bn) over the last 12 months, reaching £159.4bn in Q1 2026.

Despite this growth in manufacturing output, rising inflation has reduced overall productivity gains, with manufacturing productivity falling by 1% after adjusting for price increases.

The latest data highlights the ongoing pressure facing UK manufacturers as they work to improve productivity, increase production output, reduce operational costs, and protect profitability in a challenging economic environment.

Read our full analysis of UK manufacturing output trends for Q1 2026 below.

Q1 Headline Performance

Q1 Headline PerformanceRead More

UK Manufacturing Productivity Index

UK Manufacturing Productivity IndexRead More

Subsector Output & Productivity

Subsector Output & ProductivityRead More

Q1 Subsector Performance

Q1 Subsector PerformanceRead More

“These are turbulent times, and that makes growth a big challenge for the manufacturing base as a whole. The sharp rises in energy prices we’ve witnessed since March are a major concern to manufacturers, and should be forcing even greater focus on efficiency and productivity to maintain profitability.

However, the human instinct is often to look at cutting costs first, missing the opportunity to get more out of their resources and drive ruthless efficiency, which is a more strategic pivot to deliver long term resilience. ”

Chris Iveson, CEO & Co-Founder

Q1 2026 Subsector output and productivity

Growth in UK manufacturing over the last year was driven by a 12.1% (£929m) year-on-year increase in the aerospace sector, including aircraft, spacecraft, and related machinery manufacturing. The sector generated £8.6bn in manufacturing output during the first three months of 2026, making it one of the strongest contributors to overall UK manufacturing growth.
Other areas of UK manufacturing also recorded growth over the last 12 months. Food production increased by 2.7% (£701m), while the value of computer, electronic, and electrical product manufacturing rose by 3.4% (£358m). Textile, apparel, and leather manufacturing output also increased by 2.0% (£50m).

Additional growth was recorded in chemicals and pharmaceutical manufacturing, where output increased by 1.2%, alongside alcohol and tobacco production, which rose by 0.7%.
The value of UK automotive manufacturing, including motor vehicles and trailers, was 3.3% lower in Q1 2026 compared with Q1 2025. The sector produced £21bn in manufacturing output during the first three months of 2026.

Although automotive manufacturing output fell by £715m year-on-year, production levels recovered significantly compared with the final quarter of 2025, increasing by more than £2bn quarter-on-quarter.

Q1 2026 Manufacturing subsector performance

How Much More Productive Could Your Factory Be?

Manufacturing productivity has a major impact on operational performance, competitiveness, profitability, and long-term business growth. For both individual manufacturers and the wider UK manufacturing sector, productivity is one of the most important indicators of operational health and factory efficiency.

Manufacturers use productivity metrics to measure how effectively labour, machinery, materials, and production time are being used to generate output. Improving manufacturing productivity helps businesses increase production capacity, reduce operational costs, improve machine utilisation, minimise downtime, and strengthen profitability.

There are several strategies manufacturers can use to improve productivity. Many manufacturers invest in manufacturing technology, machine monitoring systems, automation, and production analytics to streamline operations, reduce manual processes, minimise errors, and increase production speed.

Efficient supply chain management, waste reduction, preventive maintenance, and sustainable manufacturing practices also play an important role in improving operational efficiency and factory performance. In addition, regularly reviewing production workflows, identifying bottlenecks, and creating a positive working environment can help manufacturers improve productivity across the shop floor.

Manufacturers that proactively use FourJaw’s machine monitoring and production analytics technology can typically achieve productivity improvements of between 10% and 20%, while increasing production capacity by as much as 30% using existing factory resources.

Across the wider UK manufacturing sector, a productivity improvement of this scale could represent an additional £62bn in manufacturing output capacity.

For a manufacturer producing £4.6m worth of goods annually, this could mean generating up to £1.4m in additional output in 2026 using the same machines, workforce, and production lines, without significant capital investment in new equipment.

Methodology

FourJaw Manufacturing Productivity Index

FourJaw’s data team analysed a range of data provided by the Office of National Statistics (ONS) to create a rolling five-year picture of output and productivity for the whole UK manufacturing sector and at the subsector and company level. Sources included the ONS’s Index of Production and producer price inflation datasets, and UK business activity, size and location statistical bulletins. FourJaw calculated productivity levels by adjusting output figures in line with the corresponding inflation rate. Company and employee level figures are averages based on the value of output and productivity per assumed active UK manufacturer at the time. Performance where indexed is indexed to Q1 2023 levels.

Aerospace boom drives marginal increase in UK manufacturing output as inflation fears rise

Q1 2026 performance