The fed’s latest Printing Outlook report found that output, orders, and confidence in Q3 displayed the most positive values for two years. The industry experienced a delayed recovery that had been expected to come through earlier in the year.
A similar pace of growth is now expected to continue into Q4, though businesses will be required to make some adjustments when the government’s budget measures impact.
Companies pricing below cost, or the perception that some are doing so, remained the top ranked business concern in the quarter, closely followed by sales levels, and access to labour. The BPIF noted that the share has also grown recently for taxation, business rates, and red tape.
While capacity utilisation has improved, it could still be better, and constraints on capacity have also been building. In particular, a shortage of skilled employees has been identified as a significant issue, the study found.
BPIF calculations suggested that capacity was restricted by just over 11% in October, up from 9% in July, around 6% in April, and 4% in January.
However, the reported profit distribution was healthier in Q3, cashflow was being managed effectively by most companies, and companies were specifically targeting improvements in operational effectiveness, sales management, and cost control as a means to help maximise future profitability.
Sustainability features once again in this report, and the BPIF said the industry appears to be continuing its improving path. More companies are involved in measuring, and minimising, their carbon footprint and making strategic investments that will improve their sustainability credentials.
In October, 72% of respondents reported that they are measuring their carbon emissions. The most popular area of attention for sustainability related investments has changed since April, with electric vehicles now surging to the top of the list.
BPIF chief executive Charles Jarrold said: “After a very challenging 2023, and a slow start to this year, overall, it’s encouraging to see this quarter’s responses which show confidence strengthening, although it’s also clear that business conditions are as challenging as ever – finding skilled people and dealing with intense competition stand out as key challenges.
“While improved confidence usually bodes well for the future, the budget is bound to have an impact on confidence too, with significant red tape and cost implications that are worrying businesses.
“Our message to government is that just when confidence has been rebounding, a new set of challenges are being introduced through the budget and other legislation, which carry the risk of setting us back.”
The survey also found that more companies increased, than decreased, their employment levels in Q3, while intentions for Q4 are also positive despite the increased concerns over skill shortages.
Average price levels had been declining for over a year, however average price levels increased, on balance, in Q3.
A majority of respondents have been able to maintain stable cost levels. However, there is still some pressure in all cost areas and labour costs continued to be the primary cost concern for companies in Q3.
When it comes to company plans to increase profitability in the next twelve months, managing operations more effectively has surged up the priority ranking to become the primary area of focus for the first time.
The survey was carried out from 1–21 October 2024 and received responses from 101 companies employing 8,572 people and with a combined turnover of £1.3bn.
