The U.S. printing industry is in the midst of a recession, with a strong hope for a recovery by the middle of 2002. That is one of the key findings from the recently released National Association for Printing Leadership’s (NAPL) State of the Industry Report, the result of extensive surveys conducted by the NAPL.
“Print is in recession,” the report stated. “The recession started long before Sept. 11. Even without that day’s unspeakable tragedy, a meaningful upturn in business that supported healthy sales growth and relieved the intense pressure on printing industry profits wasn’t likely before next spring. Now it’s not likely until the second half of 2002.”
Sales Down Again
Sales fell 9.7 percent in September for the NAPL Printing Business Panel, after declining 8.2 percent in August and 8.0 percent in June. In real (inflation-adjusted) terms, print sales fell 5.0 percent in August and were down 3.3 percent for the first eight months of 2001. During the same period last year, real print sales grew 3.2 percent.
The decline is also broad-based: The downturn, which is now nearly one year old, has been industry-wide. Sales are down so far this year in four of five regions and in six of seven company-size categories. Where sales are not down, they are growing at a fraction of last year’s pace.
The Advertising Situation
The NAPL Report also discussed the state of advertising. “Printing sales and print-media advertising are very closely correlated,” the report found.
“‘Many marketers whose profits have been hurt by economic events have been forced to cut ad budgets, as ad program expenses are more postponable than other fixed or locked-in expenses,’ Robert J. Coen, director of forecasting, Universal McCann, explained in his mid-year update, which was cited by the NAPL study. “But, Mr. Coen adds, ‘The most disastrous and sudden development has been the boom and bust in dot-com marketers’ ad spending.’
“The result: Magazine advertising will grow just 1.0 percent in 2001, down from 11.5 percent last year; direct-mail advertising just 4.5 percent, down from 7.5 percent last year; and total printed advertising just 3.7 percent, down from 6.7 percent last year,” the NAPL report noted. “Remember, those projections were made in June. They are sure to be reduced considerably. Next year looks better because the economy will strengthen and congressional elections and the Winter Olympics should boost advertising.”
While the early portion of 2002 will be difficult, the NAPL expects solid growth by mid-year.
The survey concluded that print sales declined between 2.5 and 3 percent in 2001. For the first half of 2002, a further drop of 0.4 to 1.6 percent is anticipated, but a “meaningful recovery” begins after mid-year and is well established by the fourth quarter. Print sales are expected to grow between 3.5 percent and 4.7 percent from July through December. The second-half upturn will allow print sales to grow 1.0 percent to 2.2 percent for the full year.
For 2003, the NAPL expects that the economic recovery will gain momentum, boosting print sales by between 6.4 percent and 7.6 percent, the strongest since the mid-1990s.
The cost of the report is $249 for non-members and free to NAPL members. To order the NAPL 2001-2002 State of the Industry report, call NAPL at (201) 634-9600.