The printing industry did not share in the small growth in the UK economy in the second three months of the year.
While the ONS says the economy grew 0.4%, the UK printing and packaging sector plunged into a down turn according to the BPIF’s Printing Outlook survey. Only one in five could report an increase in sales; two fifths reported a decline while the remainder held steady.
This amounts to an industry “suffering from a concentrated period of cost increases that have necessitated some degree of price increases, but not to the degree required to protect cash flow, margins and profits – or to grow or maintain in many cases”.
While this is gloomy enough, the situation was not as bad as had been expected three months ago and now the outlook for Q3 is positive, albeit only marginally so.
The greatest concerns that respondents to the survey face are led by sales levels, mentioned by 55%. This is well above profit levels (39%) and the perennial issue of competitor pricing at 34%.
There are clear signs that against a back drop of global uncertainty: recruitment intentions have been scaled back even when the lack of suitable skills is acting as a constraint on capacity; capacity utilisation has shifted downwards; pressure on profit levels continues.
Expectations for the current quarter are more optimistic. Cost increases are not expected to the same extent as in Q2; order books are expected to be stronger. The Burnham bounce is not yet a factor for UK print but the state of the trade in Q2 had deteriorated according to 29% of those responding, which was less than expected three months earlier. The coming three months show stronger sentiment towards the state of the trade.
BPIF chief executive Charles Jarrold has added to the new Prime Minister’s in tray. “Of course, some other persistent and common gripes remain; lack of investment support, an increasing regulatory burden, more obstacles in trading with the EU, recruiting difficulties, damaging effects of minimum wage increases, and inconsistencies in business rates, to list a few. We do of course voice such concerns in our regular representations to Government; we’ll find out more about the direction the new Prime Minister will take in the next few weeks and months.”
