The BPIF has released its latest Printing Outlook study of the health of the industry, reporting muted growth in Q4 without the usual seasonal boost.
The lack of a seasonal upturn coincided with the worst Q4 output report for five years – 40% of printers increased output levels in the period while 40% held their output steady.
This marked lower growth than the preceding Q3 period, and is also below Q4 periods from recent years.
The forecast for Q1 is subdued, but not unduly so for the period, the BPIF said. Almost two-fifths of respondents (37%) predict that they will increase output levels in Q1 and a further 38% expect their output levels to hold steady. These figures compare favourably with historic actual Q1 performance.
BPIF research manager Kyle Jardine said: “It was disappointing that there wasn’t a sign of a seasonal boost. Going back a number of years after the financial crisis we saw a period there where there was no seasonal boost but then it slowly started coming back again.
“Part of it is due to changes in the industry, but printers may also be able to spread out their work a bit better by managing the work that they do and the clients that they serve, so that they’re not just relying on the seasonal boost.
“But the expectations were low for the period, so whilst there was no seasonal boost, the period has still performed a bit better than it was maybe feared it would. Nonetheless, you do still hope that the Q4 period will be above what the Q3 period was, which hasn’t happened.”
He added: “But 40% of respondents to the survey described their company as ‘expanding’, so there are companies performing well, certainly those that are exporting.”
Confidence in the general state of trade in the printing industry deteriorated in Q4, though not quite to the depth that was forecast, and the outlook for Q1 is similarly depressive, the BPIF said.
Competitors’ pricing below cost remains the most voiced business concern, and the proportion selecting it as such increased this quarter, from 65% to 70% – in the preceding quarters it was 70% and 81%. Additionally, the report found that the squeeze on margins is showing no signs of letting up.
Paper and board prices remains the second ranked concern – this was selected by 60% of respondents, up from 47% last quarter and 42% and 32% prior to that.
Access to skilled labour remains the third ranked concern, as selected by 32% of respondents, putting it above poor output prices, which has replaced late payment by customers as the fourth-ranked business concern.
On a more positive note, the survey found that intentions for plant and machinery investment have strengthened for 2018, and plans for product and process innovation have also improved.
“In the last few years, that part of investment has got more attention from companies. People who have perhaps been holding back on buying a new machine have been looking at what else they can do to try and improve efficiency or serve their clients,” said Jardine.
Recruitment also picked up from Q3 to surprass the expectations for Q4.
Additionally, the industry has welcomed December’s progress in the negotiations and the move to phase two of the Brexit talks, as confidence becomes slightly less negative.
Slightly more respondents (18%) are now ‘somewhat confident’ regarding the outlook for the UK economy, up from 17% in Q4, and just over one-third (34%) are currently ‘neither confident nor unconfident’, up from 27% previously. Just over two-fifths (41%) are ‘somewhat unconfident’, down from 50% in Q4.
The BPIF Outlook survey was carried out during 2-17 January 2018 and polled 119 companies representing 8,417 staff and a combined turnover of more than £1bn.