According to the study, for the first time in years, there was a positive balance in selling prices and margins in two consecutive quarters, Q4 2006 and Q1 2007.

However, the industry body’s quarterly study said the improved fortunes of many printers had come at a “heavy cost”, reporting a high number of business closures and redundancies.

The analysts found that, year-on-year, the number of firms working below full capacity halved from 37% to 18%. Some 10% of survey respondents also reported that they had witnessed “some kind of change of ownership” in the past three months.

BPIF Corporate Affairs director Andrew Brown said: “It is clear that continuing rationalisation in the industry has improved the position for those companies that remain. However… life continues to prove challenging.

“Competition remains fierce and margins are under pressure from rising costs. We can expect to see more merger and acquisition activity in the period ahead.”

The full Directions report, sponsored by Premier Paper, is available free to BPIF members or £25 for non-members. Visit: www.printdata.org.uk.