Chemicals industry reports highest revenue growth in UK manufacturing, while margins fall

Ineos Inovyn / Christian Smith

REVENUE across the UK chemicals and energy industry increased by 72% over the last year, growing faster than 11 other manufacturing sectors, according to recent analysis. 

However, gross profit margins in the sector fell by 3%, suggesting that costs increased at a faster rate than turnover. High energy costs have been attributed for several major plant closures in the last year, including Ineos’s decision last week to suspend production at its acetyls plant in Hull. 

The figures were published in inventory management software developer Unleashed’s latest Manufacturing Health Index, which collected sales and purchase order figures for over 600 small to medium enterprises for Q2 in 2025 and 2026. In contrast to chemicals and energy, average revenue across the 12 sectors fell by 6% year-on-year. 

Other sectors in Unleashed’s analysis included food, beverages, clothing, electronics and personal care. Nine sectors recorded a drop in gross profit margin, five of which saw revenue growth. The only sector to record an increase in both revenue and margins was beverage manufacturing, which grew by 20% and 14% respectively. 

Margins in industrial machinery, meanwhile, increased by 10% despite a 57% fall in revenue.

Head of product at Unleashed Jarrod Adam said manufacturers were struggling with “high input and energy costs alongside uncertain demand”. 

He also noted that personal care, health and sport and recreation manufacturing each grew “strongly”, raising the “question of whether consumers are prioritising spending on how they look, feel and live, even as they cut back elsewhere”.

‘Fragile optimism’

Meanwhile, UK manufacturing trade group Make UK’s recent quarterly outlook found “encouraging signs” across industry as manufacturers’ confidence grew for the first time since mid-2025. 

UK orders, exports, investment and output – “the key factors that shape how manufacturers view the months ahead,” according to Make UK CEO Stephen Phipson – all grew.

He added: “The task is now to turn that fragile optimism into sustained growth by tackling the costs and barriers that prevent manufacturers from investing, employing and expanding.” He noted high energy costs as “one of the most immediate barriers”. 

However, Make UK’s survey also found a “sharp slowdown in recruitment”, which senior economist Fhaheen Khan said “shows that high employment, energy and regulatory costs are forcing firms to think twice before taking on new people”.