More Encouraging Signs

By Andrew Paparozzi
In April 29, 2010

Conditions in the economy, from production to spending are looking up. While it may not seem so to the multitude of unemployed, the recession is over. The latest consensus from Blue Chip Economic Indicators has inflation-adjusted GDP rising 3.1% this year—after declining 2.4% last year, the steepest decline in six decades. And the cyclical recovery is shaping up to possibly be even stronger than currently expected—a testament to the resiliency and dynamism of the U.S. economy. Profits have improved, businesses are investing and may soon begin hiring, consumers are spending, and all seems to be going in the right direction. The business cycle is forging ahead, and that’s good. But let’s not get carried away with euphoria, at some point the inherent forces of a cyclical rebound will dissipate. Then the question becomes: What growth path will the economy assume?

Indicators for our industry also clearly are moving in the right direction. Preliminary data from the NAPL Printing Business Panel point to industry conditions looking up. In fact, we may very well be at or near a turning point, with the industry moving into actual recovery—actual growth not just smaller declines. In April, only 11.2% of the Panel sees business conditions declining further during the next six months—down from 70.8% in December 2008 and the lowest percentage since September 2007. Only one in four companies are responding no, when asked if they were seeing any encouraging signs. At almost 47.0, the Printing Business Index™ is quickly moving toward the 50.0 level, an indication that a majority of the companies we survey report business is picking up. More complete data will be discussed in the upcoming May NAPL Printing Business Conditions. If you aren’t at least seeing some stabilization in business activity, you need to quickly uncover why. And we can no longer put all the blame on a bad economy. But once again, let’s not get ahead of ourselves. While any cyclical pickup in industry activity is certainly much welcome news, especially after unprecedented declines, it is just that—cyclical. The industry is not returning to what it was prior to the steep downturn, not that overall conditions were all that great then. But, of course, everything is relative.

A strategic focus is more critical than ever. As was discussed in the Spring 2010 NAPL Business Review article, “Don’t Lose Sight Of Strategic Focus On the Upswing,” don’t get sidetracked by a temporary boost in activity. And note: If you’re not paying attention to the “changing rules of recovery,” as outlined in the NAPL Strategic Perspective 2010, the pickup most likely will be temporary. This report will be discussed during an upcoming Webinar on May 14. Moving ahead, the continuing structural makeover of the industry will begin to overtake the effects of the cycle. How are you preparing to turn structural changes into opportunities and not challenges? Are you even thinking about it? If not, you should. Printers strive to keep waste to a minimum, and in a rapidly changing business environment, time is something no one can afford to waste.

Andrew Paparozzi        Joseph Vincenzino        Kong Lue Wang

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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