Latest numbers from one of the UK’s biggest manufacturing industries show the difficulties of the current economic situation.

The Q3 business survey results in the chemical sector show a first fall in sales since the height of the pandemic. Sales are expected to continue falling in the final quarter of 2022 and the start of 2023 as the UK braces for a turbulent Winter.

The Chemical Industries Association’s Chief Executive Steve Elliott said: “It’s never good to see that over 40% of companies are seeing sales fall in the third quarter alone. Apart from the economic challenges, persistent supply chain challenges are causing delays in meeting orders. With inflation sitting at almost 10% and expected to rise in the coming months, the cost-of-living crisis is continuing to dampen demand through the second half of 2022 and we think will do so in the first part of 2023. The Energy Bill Relief Scheme provides businesses with much needed insulations against rising energy costs over the Winter however we’re far from out of the woods. It’s going to be a tough Winter. We eagerly await and stand ready to inform the Government review into the energy relief scheme, which is to be published in early January 2023. We need though something much more long term if we are to maintain current, and attract new, investment and jobs in to the UK.  I am encouraged that if we get through the coming months, then companies in our survey expect sales, production and new orders to be higher in a year’s time than at present, however these forecasts contain a high level of uncertainty.”

Analysing the survey findings, the Association’s Head of Economics, Tom Warren said: “This quarter’s survey data displays a marked downturn in performance following eight consecutive quarters of sales growth. Energy costs, raw material costs and shortages, and labour costs remain the top four largest challenges currently faced by the industry. All of these challenges are continuing to intensify with over 90% of businesses reporting that the challenge surrounding labour cost increases is worsening. On the positive side more companies reported increasing their output prices (81%) than did experience an increase in their input prices (76%), although margins continued to be squeezed in spite of this.”

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For more information or to interview Steve Elliott, please get in touch - Simon Marsh at [email protected] or 07951 389197.

• The CIA’s Q3 Business Survey was completed by 54 chemical companies who have operations right across the UK and encompass, small, mid-size and large corporate businesses.
• The survey focuses on performance in the third quarter of 2022 (July, August and September) and what is expected in the final quarter of this year and in 12-months’ time. Aside from the standard questions on industry performance and the challenges faced by the industry, this edition contained questions surrounding the Energy Bill Relief Scheme and ‘Mini-Budget’.
• Businesses who make chemical products and solutions are integral to something like 96% of all manufactured goods.  Whether it is ingredients for food and medicines; paints and coatings for cars and planes or materials for mobile phones and electric vehicle batteries, the chemical industry is truly the “industry of industries” – also playing a critical role in the nation’s response to Covid-19 through its supply of hand sanitiser, PPE and vaccine ingredients.
• Chemical businesses are located throughout the UK, with many of them clustered together in the North East of England, North West of England and Central Scotland.  These factories and laboratories, operated by a highly trained and skilled workforce, make a significant contribution towards the UK’s productivity performance – double that of any other manufacturing industry and triple that of any part of the UK economy.
• Nearly half a million people are employed in the sector or have roles that are dependent on the sector. Chemical workers typically earn around 35% more than other manufacturing industries and almost 50% more than the average worker.
• From Runcorn to the Humber Bank; from Teesside to Grangemouth, chemical businesses and their employees right across the country are essential to the Government’s levelling-up agenda.
• We are one of the country’s biggest manufacturing exporters, sending goods to the value of more than £54 billion to other countries. The EU represents our most important market, but we continue to work closely with Government to inform and secure UK trade deals with other key chemical markets such as Japan and the USA.