Business outlook for manufacturing and construction

Last updated 27/09/2019 - 11:05

Subdued business outlooks

In the Confederation of Finnish Industries’ (EK) Business Tendency Survey, Finnish companies describe the economic conditions as slightly better than average, and in the summer, the conditions were reasonably stable in all main sectors of the economy. The business outlooks for the coming months are subdued in all main sectors. Business outlooks have now been fading for more than a year already. In terms of the main sectors, the outlook is the weakest in construction, but also industry and services have fallen clearly during this year.

The downward risks of the global economy are increasing and the outlooks for this and next year continue to be cautious. The uncertainty is maintained by the tensions in trade policy and the weakening of the real economy at the same time. In Europe, the weakening of the German economy especially causes worries.

Manufacturing and construction

Based on EK’s Business Tendency Survey from July, the economic conditions of manufacturing and construction companies in Uusimaa continued on a clearly more positive level than usual. The economic conditions were, however, expected to decline slightly in late summer and early autumn. The business outlook balance indicator was -9 in July (-7 in April). In July, 18 per cent of the respondents expected a deterioration, while 9 per cent predicted an improvement. In the Uusimaa region, the business outlooks of companies are higher than the national average.

Production increased slightly in the second quarter, and the production volumes are likely to continue to grow also as autumn approaches. In July, 92 per cent of respondents in Uusimaa were utilising their full capacity, and orders in hand were better than usual. The number of employees increased slightly in the beginning of the summer, taking into account seasonal variations, and it is likely to increase in the coming months as well. In July, 36 per cent of respondents had recruitment difficulties. Profitability was slightly better in the second quarter of the year than in the previous year.

The business outlook of Finnish manufacturing companies is still positive, but the decline has continued since the spring, and the outlooks are expected to continue weakening in the next six months. New orders received by manufacturing companies fell under the usual level in April–June, and also export orders weakened from the spring. The tendency survey indicator for manufacturing was -12 in July (-8 in May). In July, 82 per cent of respondents were utilising their full capacity. The number of employees has continued to increase, and the outlook for the autumn is positive. Stocks of finished goods were still slightly higher than usual and increased somewhat from the May survey.

Construction companies in the entire country estimated that the economic situation has continued as quite good, and the current situation is still described as stronger than average. The general business outlook is expected to weaken towards the autumn. The business outlook balance indicator was -21 in July (-8 in May). In July, as many as 95 per cent of construction companies estimated that they were at their full capacity. Production expectations have, however, decreased from the spring. The number of employees is expected to remain unchanged when seasonal variation is observed.