CBA News

The Chemical Business Association’s (CBA) latest Supply Chain Trends Survey forecasts a significant downturn in trading conditions following the Brexit vote.

Order books, sales volumes, and sales margins all turned negative in the few days after the Referendum result.

To measure the impact of the Brexit vote on business sentiment, CBA’s regular Trends Survey was undertaken in two parts – in the week prior to the Referendum vote and during the week following the decision.  The two samples, totalling 43 member companies, or 35% of CBA’s membership, were then analysed separately.

In the following analysis, the 23 responses received (on 20-21 June 2016) prior to the vote have been compared with the 21 responses received in the week after the vote (between 27-29 June 2016).  CBA is confident that double counting between the two samples is not an issue.   As a benchmark, the analysis also shows the results of the last Trends Survey in March 2016.

About the Survey

CBA’s 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 all responses answering ‘same’ and focuses on the positive or negative balance provided by the difference between the ‘better-worse’ responses.

• ORDER BOOKS
March 2016   +21%
Pre-Referendum  +30%
Post-Brexit Vote  -4%

Commentary – Members are asked if their current order books are better, worse, or the same than in the previous three months.  Responses to this question therefore measure orders already received from customers. Despite this, the response following the Brexit vote shows a significant negative swing affecting more than one third of respondents.

• SALES VOLUMES
Current Sales  Future Sales
March 2016   +9%          +30%
Pre-Referendum  +22%          +18%
Post-Brexit Vote  +4%           -28%

Commentary – Respondents are asked to compare current sales volumes with the preceding three months and indicate their expectations for the next three months.  Again, the pessimism following the Bexit vote appears to be influencing more than a third of responses.

• SALES MARGINS
Current Margins  Future Margins
March 2016   +9%          -14%
Pre-Referendum  -8%          -8%
Post-Brexit Vote  -20%           -35%

Commentary – Members are asked to compare current margins with the prior three months and provide a forecast for the next three months.  Though historically, trends in sales margins have been the most volatile aspect of the Trends Survey, the decline in expectations after the Brexit vote is more significant than any previous Survey.

• EMPLOYMENT
March 2016   +12%
Pre-Referendum  +21%
Post-Brexit Vote  -14%

Commentary – Over the last three years, CBA members have generally been positive about increasing the levels of employment in their companies.  It would be fair to consider the response following the Brexit vote as reflecting companies’ uncertainty about future trading conditions.

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Further information from:
Peter Newport
Chief Executive Officer, CBA
01270 258200
www.chemical.org.uk