The UK fashion manufacturing sector is entering 2025 with signs of strain, as a new report highlights a decline in sales and purchasing activity, alongside longer lead times. According to the latest UK Manufacturing Health Index, demand remains “shaky,” with the first quarter of 2025 showing weaker-than-usual performance, despite some of the negative figures being influenced by an exceptionally strong Q3 2024.

While comparisons to the previous quarter appear poor, it’s important to note that Q3 2024 was a particularly successful period, which skews current results. The current performance is more in line with typical levels, albeit somewhat subdued.

The report also highlights potential challenges on the horizon, particularly with recent announcements from the U.S. regarding import tariffs. These changes are expected to increase uncertainty and could place additional pressure on the UK fashion manufacturing sector, potentially dampening activity. The full impact of these developments remains to be seen.

Sales and Orders Decline for Fashion Manufacturers

Unleashed, an inventory management and software company, reported a significant dip in sales for small and mid-sized firms in the fashion sector. Sales revenue dropped by a third in Q4 2024, from £524,000 in Q3 to £352,000. In addition, the number of purchase orders (POs) halved from 790 to 399, while lead times increased slightly from 23 to 25 days.

The research further reveals that sales revenues were down nearly 3% compared to the same period in 2023, and purchase orders declined by over 8%. However, in the fashion sector, profitability and return on investment saw some improvement, both year-on-year (YoY) and quarter-on-quarter (QoQ), despite a drop in sales revenue during these periods. Notably, the YoY sales decline of almost 3% was relatively mild compared to the dramatic 33% QoQ drop.

Lead Times Improve, but Challenges Remain

While lead times did increase from 23 to 25 days QoQ, they were still a significant improvement over the 38 days recorded in Q4 2024. This suggests that while the sector faces challenges, efficiency in some areas is improving.

Although the fashion industry experienced a slowdown, it wasn’t the hardest-hit sector. Unleashed’s data, which spans across 12 different industries, shows that suppliers in the energy and chemicals sectors saw even larger declines.

Low Consumer Confidence and Volatile Trade Conditions

The report attributes the slow start to 2025 to low consumer confidence and volatile international trading conditions. These factors appear to be affecting manufacturers across multiple sectors, contributing to a difficult beginning for many businesses.

However, there is some optimism. Unleashed notes that while the downturn in Q4 2024 may be concerning, it’s important to remember that Q3 2024 was an unusually strong period, with both sales and purchase orders surging. This suggests that the current figures are closer to normal levels, though still a bit weaker than hoped.

In conclusion, while UK fashion manufacturers are facing a challenging start to 2025, the sector may be returning to more stable, albeit subdued, levels of activity after an exceptional Q3 2024.