CIA members "extremely concerned about the next few months and impact on long-term investment"
London – The latest survey of business confidence from the UK chemicals manufacturing industry shows a strong performance but concerns for the future remain.
Off its second quarter survey of member companies, the Chemical Industries Association reported an eighth successive quarter of growth for the sector but warned that this performance was not expected to continue into the third quarter.
Some 50 chemical businesses, ranging from multi-nationals to SMEs located across the UK expected new orders, exports, and domestic sales to fall in the third quarter of the year.
The negative business sentiment was linked to signs of an erosion in demand due inflationary pressure on both households and businesses, according to the CIA release issued 25 July.
Despite the persistent rises in energy, raw material, transportation, and labour costs, as well as a myriad of logistical challenges – the industry continued to grow in the second quarter of 2022,” commented Steve Elliott chief executive of the CIA.
Elliot added, however, that “our membership is extremely concerned about the next few months and the impact that could have on long-term investment.”
For example, he said, the industry has been working with massive increases to input prices for nearly a year now with robust demand helping companies to deal with that.
“However, as consumer inflation approaches double digits and with producer inflation being at twice that level, orders from customers are beginning to reduce,” said Elliot, who called for UK government measures to ease pressures on energy costs and supply.
Highlighting the survey findings, CIA head of economics, Tom Warren said: “Energy costs, the cost of labour, and raw material costs and shortages continue to be the four largest challenges facing the chemical industry.
“Concerningly, all four challenges are felt by respondents to be worsening. Indeed, as inflation in the UK continues to rise, in June rising to 9.4%, a 40-year high, each of these challenges are being further compounded.”
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