Major UK manufacturing sector facing difficult time 

The Q3 business survey results in the chemical sector show the 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. 

CIA Business survey results

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.  

A tough winter 

“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 of 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 into 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.”