SLIGHT RECOVERY IN OUTPUT AND ORDERS FALLS SHORT OF EXPECTATIONS IN Q4 - CONFIDENCE CONCERNS MOUNT IN 2024

Performance in the UK's printing and printed packaging industry did improve in Q4, as far as output and orders are concerned. However, it didn't come close to what would historically be considered the seasonal norm, nor quite match the subdued expectations for Q4. Output was expected to return to growth in Q4, and that did indeed happen - on balance. Unfortunately, a few more companies than expected experienced a downturn, and that limited overall growth.

Previously, a fragile economy, lingering concerns over inflation levels, for both consumers and businesses, and the possibility of further interest rate increases; were restricting growth. These concerns have now diminished, inflation is expected to hit its 2% some time in Q2, market expectations are that interest rates will fall to 3.25% at the end of next year, and UK economic growth is expected to pick-up - albeit very gradually. However, caution over costs remain and, with rising tensions in the Middle East, and forthcoming elections in the US and UK, the geopolitical situation remains uncertain.

Printers continue to concentrate on controlling costs, increasing productivity, and be largely cautious regarding investment. Some cost pressures have eased, and whilst energy is expected to ease further, there is mounting concern over future paper and board prices, and labour costs - which will come under additional stress when national minimum wage increases add pressure to maintain wage differentials in the workforce.

However, capacity utilisation has improved in each for the last two quarters, some significant cost pressures have levelled out, a majority of companies seem to be in a decent financial position with positive investment intentions - and a particular focus on innovation, efficiency and sustainability related improvements.