The Q4 seasonal upturn for the UK printing industry was better than expected - trade is forecast to at least hold steady for the majority in Q1 2017.
The latest ‘Printing Outlook’ survey reveals that 43% of printers taking part in the poll increased output levels in the fourth quarter of 2016. A further 43% held output steady whilst 14% experienced a decline in output. The resulting balance (the difference between the ups and the downs) was +29; significantly improved from +2 in Q3. However, 2016’s Q4 report was less positive than the previous year’s equivalent Q4 balance of +41.
Q1 will undoubtedly struggle in comparison with the seasonally busy Q4 period, but the Q1 forecast remains relatively positive. Exactly two-fifths of respondents predict that they will increase output levels in Q1 and 38% expect output levels to hold steady. Just over one-fifth (22%) forecast that output will fall in Q1. The forecasted balance of +18 would, if realised, be the most positive Q1 for three years. However, the Q1 period can often challenge businesses; and of course the forecasts.
Confidence in the general state of trade in the printing industry has improved but does remain subdued in comparison to recent Q4 periods. With many companies reporting a healthy improvement in output and orders there has been an improvement in confidence in the general state of trade in the wider industry. The Q2 and Q3 reports, in the immediate aftermath of the EU referendum, showed that confidence levels took a hit – however confidence has exhibited an improvement in Q4.
Competitors pricing below cost continues to be the most voiced business concern - this was selected by over three-quarters (76%) of respondents, up from 64% previously, and there were additional comments referring to concerns over the effects of trade print sites offering undervalued print. Paper and board prices remains the second ranked concern; this was selected by 39% of respondents (down from 50% last quarter). Access to skilled labour continues to be the third ranked concern - with 33% of respondents selecting it in Q4; up from 29% in Q3.
Confidence regarding the outlook for the UK economy during the Brexit negotiation period appears to have improved amongst respondents. Newly introduced questions to the survey have established that over one-third of respondents (36%) are now ‘somewhat confident’ regarding the outlook for the UK economy. Less than one-third (31%) are ‘neither confident or unconfident’ and less than one-quarter (24%) are ‘somewhat unconfident’. That leaves the extremities where 5% are ‘very confident’ and 4% are ‘very unconfident’.
Using these figures the BPIF has established a ‘Brexit Barometer’. A weighted balance, where the ‘very’ and ‘somewhat’ confident returns offset the equivalent unconfident returns is then scaled so the federation can depict the level of confidence in the industry on the economic outlook during Brexit negotiations and monitor how that confidence changes over time.
The weighted balance is 14 - which places the current Brexit Barometer for the UK economic outlook during the Brexit negotiation period on the positive side of the scale; and in the ‘somewhat confident’ zone.
Charles Jarrold, BPIF Chief Executive, said: “The new BPIF ‘Brexit Barometer’ provides further evidence of the resilience of the UK printing industry. Earlier BPIF research showed that there were many concerns about the impact of Brexit - but now that it is about to become a reality firms are clearly looking for opportunities with some optimism and confidence.
“We have also produced a ‘Post-BrexitBarometer’ to help us gauge opinions on how the business environment might compare following Brexit. I’m sure it will be useful and interesting to keep an eye on these as Article 50 is evoked.”