The CIA gathers industry insights through a quarterly business survey to advocate for our members’ interests with policy makers, regulators and other stakeholders.
The chemical and pharmaceutical industry is fundamental to modern society. With an immense variety of products, from vital medicines and foods, the construction of buildings, to transport and leisure, the industry truly does have an impact on virtually every aspect of our daily lives.
The Chemical Industries Association undertakes a quarterly business survey of member companies. The data collected, and official data provided by the Office for National Statistics, is then presented back to members for further analysis. The economic report looks at the topics discussed by members in addition to the economic performance of the prior quarter and forecasts for the future.
The UK chemical industry’s performance against the wider economy:
Following a strong performance in Q2, chemical output declined in Q3 and currently stands 29% below pre-pandemic levels, reflecting the impact of the energy crisis on industrial production.
Low demand and production levels have led to deflation in chemical input and output prices, now in decline for 17 consecutive months. Despite this, input prices remain 5.6% higher than output prices.
Salaries in the chemical industry continue to raise higher than inflation.
Business Survey insights
Q3 saw a return to contraction after a robust start to 2024, with declines in sales, production levels and capacity utilisation reported by one-third of respondents.
No significant changes are expected in Q4, though 60% of respondents anticipate improvements over the next 12 months.
The sector’s top three challenges are weakening demand, high energy costs, and rising labour expenses. Weakening demand was cited as the primary concern by 48% of respondents, likely reflecting Q3’s lower sales compared to Q2. Projections for these challenges also remain at historically low levels.
The key themes required from the industrial strategy are certainty and long term polices with the main areas identified being: investment support, skills shortages, energy support, and net zero help.
At the CIA we undertake a quarterly business survey of our membership to identify arising trends, gather consensus and evaluate industry feel regarding arising issues to communicate with government and the media on operating conditions for chemical manufacturers across the quarter. Results from the business survey are discussed in the quarterly economic report. The data collected, and official data provided by the Office for National Statistics, is presented back to members for further analysis. A comprehensive economic report is then published, looking in detail at the topics discussed by members, in addition to the economic performance of the prior quarter and forecasts for the future.
CIA Economic Report Q3 2024
Download report for a full analysis of the sector’s performance against the wider economy and further understanding of critical industry challenges. For more information contact CIA Head of Economics, Michela Borra at borram@cia.org.uk
On 30 October, Chancellor of the Exchequer Rachel Reeves will deliver the Autumn Budget, accompanied by a full fiscal statement from the Office of Budget Responsibility (OBR). In a detailed submission, the industry presents 35 specific proposals for policy changes covering the Government’s recent industrial strategy, net zero, investment in people and innovation.
