The second quarter survey of economic trends revealed harsher trading conditions than those experienced in the early part of the year. Only a minority of those surveyed thought conditions were better than normal and a high number reported unusually poor order books.

A root cause is that customers are unwilling to accept paper and labour price increases, with many placing orders to cover immediate needs, resulting in shorter lead times.

Resistance to price increases meant that few respondents were able to improve margins and those who did lost work to competitors. Many of those surveyed envisage price reductions and rising material prices continue to plague the industry. These pressures are further squeezing margins.

Despite these difficulties, two-thirds of the industry expect prospects to improve, with higher volumes and improved employment prospects.

British Roll Label Association chairman Andy Leet commented: ‘The optimism reported is encouraging, particularly if companies in the sector have the confidence to recruit and train for the future. However, there is a danger that over-optimistic budgeting will create even more capacity than the market demands and individual company targets will be met only through competitive tendering within the industry.’

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