There has been a decline in orders and production, sales and net profits, while employment and overtime has been reduced. However there has been an increase in plant and machinery investments during the past six months.
The September 2012 quarter outcomes represent the nineteenth consecutive quarter where reported industry outcomes came in below expected outcomes for a host of economic indicators.
The deterioration in trading conditions during the September 2012 quarter reflected reported outcomes a year earlier. According to Printing Industries this suggests that seasonal influences which used to be an important factor in determining and shaping industry demand have largely been absent from the industry scene from the past 18 or so months. With declining activity, concern persists about industry capacity utilisation rates which despite the welcome improvement, still remain at historically low levels.
The September quarter results shows that 53.8 per cent of respondents were operating at capacity/activity levels of 70 per cent or over, an outcome that is slightly lower than the 54.9 per cent proportion reported for the same period a year earlier.
Some 90.6 per cent of survey respondents ranked lack of orders as the primary barrier to increasing production levels, an outcome that is marginally higher that the 90.2 per cent proportion reported during the September 2011 quarter.
The outlook for general business expectations over the next six months remains favourable with respondents from New South Wales, South Australia, Victoria and Western Australia all forecasting improvements on net balance basis, while respondents from Queensland and Tasmania are forecasting deterioration.
South Australia reported the highest utilisation rates with 83.3 per cent of respondents operating at capacity utilisation levels of 70 per cent or more, followed by respondents from Western Australia at 60 per cent, New South Wales with 57.2 per cent, Victoria at 51.7 per cent, Queensland with 33.3 per cent and Tasmania at 20 per cent.
Most sectors are forecasting improvements or no change to take place in general business conditions during the next six months, while business forms and continuous stationary, trade binding and graphic arts machinery and supplies are forecasting deterioration in business conditions. Over the outlook period the most optimistic sectors are screen printing and security printing.
With the expectations of digital printing and other packaging and paper converting (forecasting no change), and trade binding, general promotional and commercial, and business forms and continuous stationary (forecasting deterioration), the sectors are forecasting increased investment in plant and machinery over the six months to March 2013.
Long term employment intentions is another area of concern, it continues to record significant deterioration as businesses search for ways of reducing operating costs. The September quarter confirmed that on a net balance basis reported outcomes for both material and wage costs are trending up.
Hagop Tchamkertenian, national manager for policy and government affairs, Printing Industries says, “Over the past five years or so, the industry has submitted some optimistic projections which have not been fulfilled for a number of industry indicators. In recent quarters the only pivotal industry indicator that has seen reported outcomes match or better projected outcomes has been debtors. It still continues to increase from one quarter to the next but survey participants at least have improved their ability to forecast it.”
Tchamkertenian says, “Another interesting observation is that after a full quarter of the operation of the Carbon Tax business sentiment has not yet been impacted given that sentiment actually improved lifted strongly during the September quarter compared to the previous quarter. It is yet too early to make any definite observations about the new tax and I believe we need at least a full before making any firm statements about its impact on the printing and associated industries.”
Pivotal September 2012 quarter developments reported by the survey respondents include reduced orders and production, reduced sales and net profits, reduced employment and overtime levels, reduced investments in buildings but increased investments in plant and machinery during the past six months. In addition finance was reported harder to obtain for the nineteenth consecutive quarter, labour availability reported to have deteriorated for the eleventh consecutive quarter, there was increased material and wage costs.
Selling prices reported to have fallen for the 47th consecutive quarter, while there was an increased numbers of outstanding debtors.
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