Industry output bounced back in Q3


The UK printing industry rebounded from a lacklustre Q2 to match its positive forecast for Q3, at least in terms of output volumes, according to the BPIF’s latest Printing Outlook.

The quarterly published study of the health of the industry found that 44% of printers increased their output levels in the third quarter of 2018. A further 33% held their output steady while 23% experienced a decline in output.

The report said that while the Q3 period benefited from the traditional seasonal boost, for some this came later into the quarter than expected.

Output growth is forecast to continue for the majority of companies in Q4, with 55% of respondents predicting that they will increase output levels and a further 27% expecting their output levels to hold steady. Only 18% said they are expecting their output to fall in Q4.

“There has been a fair bit of upheaval around the industry and it’s got really busy at times and then gone quiet, so it’s pleasing to see that the forecast from last time was realised, and that this is expected to continue into the fourth quarter,” said BPIF research manager Kyle Jardine.

For the first time since the survey began, competitors’ pricing below cost was not respondents’ most voiced business concern. While 56% of respondents selected it as one of their top three business concerns, it ranked second below paper and board prices, which was selected by 65% of respondents, up from 62% last quarter.

Costs climbed further in Q3, not only for paper and board, which were most pronounced, but also for energy, ink and labour.

“Prices rises are coming through more frequently now and businesses are able to do less about them and have not been able to do as many negotiations. The long-term view is that it’s going to get worse so it is a major concern for a lot of companies,” said Jardine.

Brexit has become the third ranked concern for the first time while access to skilled labour, late payment and poor output price levels were all further back in the ranking, each selected by around 20% of respondents.

The BPIF said that, while diverse attitudes and outlooks on Brexit do still exist, looming negotiation deadlines, intensified political manoeuvring and heightened uncertainty surrounding it has led confidence to dive.

Both of its Brexit Barometers had to be re-scaled to account for falling confidence levels regarding the outlook for the UK economy during the Brexit negotiation period, and following UK withdrawal from the EU.

In comparison to the last quarter, fewer respondents – 7% down from 18% – are now ‘somewhat confident’ regarding the outlook for the UK economy while 33% are currently ‘neither confident nor unconfident’, up slightly from 31% previously, and 38% are ‘somewhat unconfident’.

No respondents are in the ‘very confident’ category and 22% have now selected the ‘very unconfident’ category, up from 8% in the last quarter.

“There’s an opportunity for a bit more certainty to come through on Brexit but I think it seems there’s likely to be more uncertain times before business gets what it wants, at least in terms of a steadier path to follow ahead,” said Jardine.

Elsewhere, the report said a desire to maintain a reliable and timely supply chain has led to a certain amount of stockpiling, with 17% of respondents currently stockpiling some supplies and 25% planning to do so.

“Stockpiling is expensive. It’s not just the warehousing costs but also the upfront cashflow and a lot of companies can’t afford to buy lots of paper even if they have got somewhere to keep it,” said Jardine.

“Some of the other consumables might be easier to stockpile though, which is mainly the kind of thing that we’re picking up on. But there are also concerns that stockpiling will then further drive up costs.”

The BPIF Outlook survey was carried out during 1-17 October 2018 and polled 125 companies employing 7,476 people with a combined turnover of more than £930m.

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