Commercial Printing Industry Activity Rising, But Still Inconsistent
Industry developments over the past year, as depicted by the NAPL Printing Business Index™, our most comprehensive measure of business activity, have been characterized by slow, inconsistent growth. The PBI™ has risen sharply from the depths of the steep downturn—it bottomed at 21.2 in March 2009—and recently has shown six consecutive readings above 50.0—a threshold that indicates activity is rising.
However, as seen in the chart below, the index has not steadily advanced during this period, ranging from 50.2 (July 2011) to 54.2 (Apr 2011). In January 2012, the latest reading, the PBI stood at 52.2. Note that the index was designed to be a directional gauge and not a measure of magnitude. To that end, readings are most meaningful in the context of their recent trend—and that trend remains one of modest, inconsistent growth.
Among the indicators that make up the PBI, confidence is displaying the most strength, with 36.2% of the NAPL Printing Business Panel expecting business conditions to improve over the next six months and just 10.4% expecting conditions to decline. No doubt, confidence levels reflect increased quote activity, as the specter of a double-dip recession continues to fade.
Nonetheless, ongoing difficulties are being reflected in the reluctance of our Panel to increase payroll hours—just 26.3% increased hours in January—and continued pressure on profitability —despite some improvement on the pricing front—just 24.1% report profitability rose last month.
Another sign of the inconsistency of the recovery: Half of the companies we survey report sales increased in December over year-earlier levels, while the other half report sales decreased—not the pattern one would expect during a solid recovery. Unfortunately, “one-month up and one-month down” still remains a pattern for many companies.
In summary, yes, conditions are slowly mending. But 2012 is not shaping up to be a breakout year. Far from it: To a large extent, success in 2012 is going to depend on individual company initiatives. A key question for everyone in our industry: What will you do to make 2012 better than 2011?