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Order books and sales turn positive but margins under pressure, says CBA


25th November 2019
The UK's Chemical Business Association’s (CBA's) latest Supply Chain Trends Survey shows that the outlook for both order books and sales have turned positive, but sales margins remain under pressure and employment prospects remain weak. 
 
CBA’s Chief Executive, Peter Newport said, “The recovery reported in this survey, whilst limited, is very welcome.  It remains difficult to assess the continuing impact of the overhang of stock building in relation to the past Brexit deadline of 31 October or the preparations for the prospective deadline of 31 January next year. Our members are determined to maintain supplies of critical chemical components to customers but financing historically high stock levels and availability of regulatory compliant warehousing is placing a strain on the resources of many companies.” 
 
The CBA’s latest on-line Trends Survey was conducted from 7-19 November 2019 and is based on responses from 51 member companies. 
 
ABOUT THE SURVEY
 
CBA’s Supply Chain Trends Survey asks companies to provide information on order books, sales, sales margins, and employment, on a ‘better–worse–same’ basis.  To measure short-term trends, the analysis ignores responses answering ‘same’ and focuses on the positive or negative balance provided by the difference between the ‘better-worse’ responses.
 
  • CURRENT ORDER BOOKS – Turned positive
Members are asked if their order books are better, worse, or the same than during the previous three months.  The November survey shows a positive balance of +13% a recovery from the -26% negative balance reported by CBA’s last survey in July 2019.
 
 
  • SALES VOLUMES – Improving
Respondents compare their current sales volumes with the preceding three months and indicate their expectations for the next three months. Current sales volumes have returned to positive territory (+12%). This is a moderate recovery from the negative balance of -17% reported in the July 2019 survey.
 
The outlook for the next three months also shows a positive trend of +18% - an improvement from the negative (-14%) three-month outlook reported in our last survey.
 
  • SALES MARGINS – Under pressure
Companies compare their current sales margins with the preceding three months and forecast their trend over the coming three months.  Current sales margins have recovered to the extent they have now created a positive balance with +2% of respondents experiencing improved sales margins.
 
Though only marginally entering positive territory, current margins have recovered significantly from the negative balance of -18% reported in our last survey. The outlook for future sales margins continues to remain negative with -8% of companies feeling they are likely to decline over the next three months. 
 
  • EMPLOYMENT – Prospect remain weak
Member companies are asked if their employment levels will be higher, lower, or remain the same over the next three months. 
 
The trend for employment in the November 2019 survey is exactly the same as that reported in July, with +2% of companies reporting higher employment levels over the next three months.  This is response continues to be the lowest level recorded since these surveys began in 2013.