Sales growth and efficiency gains put UK manufacturers on firmer footing for 2026
Sales growth and efficiency gains have helped UK manufacturers recover their margins and put them on a firmer footing for 2026, new figures reveal.
Revenue from sales rebounded in Q3 2025, with small and mid-sized firms generating an average of £412,608 – nearly 13% more than the previous quarter.
Profitability – measured as Gross Margin Percentage (GMP) – jumped by 1.3pp compared to the previous quarter, as lead times, purchasing volumes and stock-on-hand value all dropped.
Lead times fell from 27 to 19 days (-29.6% QoQ), while purchase orders (POs) and stock on hand declined by -30.0% and -27.2% respectively.
The figures appear in the latest manufacturing report from inventory management specialist Unleashed, an inventory management software platform popular with small and mid-sized manufacturers. Its quarterly report is based on data from more than 600 UK firms using the software, across manufacturing categories such as food and drink, clothing and fashion, and construction.
Joe Llewellyn, GM of ERP Small Business at The Access Group, the parent company of Unleashed, said manufacturers had moved quickly to protect their margins:
“The last quarter was characterised by a determined push towards efficiency.”
“Sales revenue was healthy, even if it didn’t reach the dizzy heights of the same period last year. But our data shows that purchasing and lead times were both down quarter on quarter, a sign of weakened demand reflected in the contracted PMI for this period. This, along with ongoing cost pressures, prompted manufacturers to act. They’ve moved from cautious ‘Just in case’ stock building in Q2 to a leaner just in time approach, cutting their margins and stock on hand to protect their margins and cash flow.”
Looking ahead, he added that operational excellence would be key to succeeding in a low-growth, high-cost environment.
“Going into 2026, manufacturers will need to make the most of data to enable forecast-driven replenishment, track landed costs in real-time, and identify and convert excess stock into cash. Doing more with less is the new reality, seen in the continued trend in industrial automation.”
Unleashed’s report also compared performance across different manufacturing categories.
Building and Construction saw a +42.6% QoQ surge in sales, and a +8.2pp uplift in GMP to 40.8%. Year-on-year, the category recorded sales growth of +14% – which is consistent with wider industry reports showing growth in the sector. Electrical and Electronic Components, in contrast, recorded a significant contraction, with sales dropping by -39.5% QoQ, albeit from a strong Q2 result.
Ryan Hanger, managing director at Titan Manufacturing Ltd, said: “At Titan Manufacturing, we’ve seen clear gains in both productivity and efficiency this year, driven by continued investment in new technology. Those efficiencies, combined with steady sales growth across our fabrication and coating divisions, have strengthened our margins in line with wider industry trends. It’s proof that targeted investment in equipment and process improvement can deliver tangible returns, even in a challenging economic climate.”
Sanjay Aggarwal, co-founder of Spice Kitchen, added: “We’ve seen a similar margin recovery in recent months, largely driven by careful operational refinements rather than cutting corners. We’ve invested time into streamlining production, improving batch planning, and tightening inventory controls, all while maintaining our hand-blended quality and family-run values. Demand has remained strong both in retail and gifting, so the combination of sales growth and smarter processes has helped us build a much healthier, more sustainable margin profile this year.”
View the full Unleashed Manufacturing Health Index report.