The latest edition of Printing Outlook, covering Q2 2019 and looking forward to Q3, showed that although 32% of printers reported increased output levels for Q2, 34% reported a steady output and 34% reported declines, resulting in a -2 balance that continues a downturn from Q1.
However, 42% of companies said they expected output growth for Q3, while 35% forecast no change and 23% expecting a fall, a +19 balance compared to a disappointing Q2.
The downturn has largely been pinned on Brexit, the uncertainty surrounding which was the top concern for 61% of respondents in the report, but also to the late Easter causing a drag.
Responding to a question on their Brexit preference, 51% of 131 firms surveyed said they would prefer no Brexit at all, while 36% want to leave the EU with a deal and a minority of 13% would prefer a no-deal Brexit.
BPIF economist Kyle Jardine said: “We asked about Brexit in the latest Printing Outlook as something of a sense check to see what the sector was feeling as, politically, we are not sure what is going to happen with the new deadline and the rising prospect of no-deal.
“Planning seems to have stepped up for the government and businesses but there is a significant amount of uncertainty, especially around who will be hit hardest.
“Obviously, whether there is a deal or not, there are concerns about the supply chain as well as cost inflations and worries about how clients will react to Brexit.”
Rising input costs continued to be a key concern for the sector, coming third behind Brexit and competitor pricing, though the strain is for the first time in three years not solely focused on paper and board, with labour, energy and ink costs all exerting more pressure.
Jardine attributed this to recent changes in the paper sector, such as increased supply in North America, while seasonal rises in wages due to pay reviews and the statutory minimum wage rising meant that Q2 would have seen labour costs spike.
Business confidence has taken a hit amid the turbulence, with 23% of firms believing that the general state of trade improved in Q2, while 39% said it was unchanged and 38% said it had worsened, leading to a balance of -15, down on the forecast of -9.
However, Jardine stressed the importance of the Printing Outlook as a tool for both printing companies and the BPIF to take action and improve the prospects of the sector.
“With the Outlook, we can report back to the industry and show them they have been affected,” he said. “But we also use it to represent the industry to government and other trade bodies. We have high-level meetings and discussions with decision makers and this helps to direct the conversation and add weight to our representation at that level.”
The BPIF Printing Outlook was carried out online during the period 1-18 July. It consists of 131 companies employing 9,894 people with a combined turnover of almost £1.4bn.