The latest Printing Outlook survey from the BPIF reveals the UK printing sector experienced a marginally better than expected fourth quarter. Following a subdued forecast for the period both output and orders just outperformed expectations, as the industry experienced a very slight upturn, aided by some election-related activity. Orders and output are now expected to recover further in Q1.
34% of printers polled increased output levels in the fourth quarter of 2019. Slightly more respondents (38%) held output steady, whilst 28% experienced a decline in output. The worst Q3 report for three years, since the aftermath of the shock EU referendum result, has now been followed by the worst Q4 report for seven years.
Printers are expecting an improvement in activity levels in Q1 2020. Output growth is forecast to increase for 39% of companies. Slightly fewer (37%) respondents predict that they will be able to hold output levels steady in Q1, and 24% expect output levels to fall. That leaves a forecasted balance of +15 for the volume of output in Q1, which is greater than the Q4 balance and only marginally lower than the balance experienced in Q1 2019.
Brexit no longer tops the business concerns list, though it does remain a major concern. On this occasion 61% of respondents selected competitor pricing as their top business concern (up from 49% in Q4). Brexit has fallen to become the second ranking with selection from 38% of respondents (down significantly from 69% last quarter).
Paper and board prices continues to remain outside the top three concerns - it was selected only by 17% of respondents. Access to skilled labour completes the top three, with 26% of respondents selecting it this quarter (as opposed to 15% last quarter). Late payment and survival of major customers also remain ahead of paper prices.
Companies have continued to express a range of concerns regarding the impact Brexit may have on their business. The primary concern, as selected by 75% of respondents, is maintaining a reliable and secure supply chain. General cost inflation came through as the second most pressing concern (selected by 40% of respondents), just ahead of non-tariff barriers (with 39%). Only a little further back was concern over tariff barriers (38%), with restricted investment from foreign companies and unskilled labour shortages due to immigration controls the next ranked concerns.
Kyle Jardine, BPIF economist, said: “So far sentiment surrounding Brexit has been largely negative and we have largely reported on concerns rather than opportunities. This focus has helped highlight concerns and issues and has fed in to lobbying and representation activities - and increasing awareness within the industry. However, as we now move into the transition period and Brexit sentiment becomes less negative, and perhaps positive, we will be having a closer look at the opportunities that could become available.”
BPIF chief executive, Charles Jarrold, added: “The UK printing industry is not alone in having had a difficult 2019. However, the latest Printing Outlook survey highlights that 2020 has started with a bit more certainty and some signs of returning confidence. Orders, output and confidence are all forecast to improve. Notably, the Brexit landscape has changed and sentiment has become much less negative. It is also very encouraging to see that the printing industry has positive investment intentions for 2020.”
