As the UK marks National Manufacturing Day (24th September), new data from Unleashed’s Manufacturing Health Index (MHI), based on a sample of 629 UK SME manufacturers, reveals a sharply divided picture of UK manufacturing health.
Half of the 12 UK manufacturing sectors analysed recorded year-on-year revenue growth between April and June 2026, while gross margins fell across three-quarters (nine of 12). Even among the six sectors where revenues increased, five recorded a decline in gross margin.
UK manufacturing growth masks pressure on margins
A 133-percentage-point gap separates the strongest and weakest performers. Energy & chemicals led revenue growth at +72% year-on-year, followed by health medical supplies & equipment (+58%) and personal care (+32%). At the other end, electrical & electronic components revenue fell -61%, followed by industrial machinery -57% and building & construction -48%. Across all industries analysed, average revenue was -6% lower year-on-year.
But even among the sectors recording revenue growth, rising sales did not necessarily translate into improving margins. Health, medical supplies & equipment saw revenue rise by 58% while gross margins fell -36%; personal care recorded +32% revenue growth alongside a -22% decline in margin; and sport, entertainment & recreation saw revenue growth of 26% but a margin decline of -18%.
Stock levels reveal another divide
The divide extends to inventory and purchasing. Across all UK manufacturing sectors, stock on hand fell -33% year-on-year, while purchase-order value declined -37%.
Energy & chemicals recorded the strongest revenue growth of the sectors analysed, while operating with considerably less inventory and lower purchasing than a year ago. Revenue jumped +72% year-on-year, while stock on hand fell -57% and gross margin was down -3%. At the same time, purchase-order value was -44% lower than a year earlier.
Electrical & electronic components showed almost the reverse: revenue fell -61%, yet stock increased +76% – the largest increase of any sector analysed – while purchase-order value dropped -64%.
Commenting on the findings, Jarrod Adam, Head of Product at Unleashed, said: “National Manufacturing Day is an opportunity to celebrate the strength and contribution of UK manufacturing, but also to take stock of what is really happening across the sector.
“Manufacturers are navigating high input and energy costs alongside uncertain demand, from labour, energy, transport and raw-material costs to uncertain demand and currency movements. Five of the six sectors where sales grew still saw margins fall, showing that revenue growth alone doesn’t necessarily translate into improved profitability. These pressures provide important context for why margins can vary so widely across sectors.
“We may also be seeing a broader version of the traditional ‘lipstick effect’. When budgets are squeezed, consumers can become more selective about where they spend. Personal care, health & medical, and sport & recreation all grew strongly, while clothing & accessories fell back, raising the question of whether consumers are prioritising spending on how they look, feel and live, even as they cut back elsewhere.
“Ultimately, revenue alone can’t tell manufacturers whether their business is getting healthier. They need visibility across margins, stock, and purchasing too. Accurate, real-time data helps businesses monitor margins and inventory costs, identify pressure earlier and make more informed purchasing decisions – reducing the risk of overspending and giving them the confidence to respond quickly as conditions change.”
