Business tendency survey for manufacturing, mining and quarrying, Q1 2001

The variable summarising the manufacturing industries' general judgement of the prospects for the next quarter shows that many are optimistic about the short-term development. This may be based on expectations of increased production and demand in the next quarter for the manufacturing industry in total. There are however considerable sector differences.

Stable development in prices are expected, but for some trades in traditional export industries (pulp, paper and paper products, chemicals and chemical products and basic metals) a drop in export prices are expected in the 2. quarter this year

Actual development in the 1. quarter shows an increase in production and stable demands. The development was somewhat better than expected. The degree of capacity utilisation is about 80 per cent. The number of working months cowered by current stock of orders has increased, and is on the highest level since the 4. quarter 1998. This may have connection with the increase in long-term orders in the offshore-related activity.

Production and new orders

Sectors producing intermediate goods (including traditional export industries) continue to show positive development with increase in production and demand. Production and new orders are expected to increase in the 2. quarter. Capacity utilisation is about 81 per cent nearly unchanged compared with the corresponding quarter last year. For the sector as a whole export prices are expected to decline in the 2. quarter.

Sectors producing capital goods (metal products, machinery and equipment, offshore-related activity and others) have had a positive development in production and employment. The level of activity has increased after a rise in new orders in the second half of the year 2000, which in part can be traced to the repeal of subsidy to shipyards from 1. January 2001 and partly higher activity in oil-related industries. A great number of manufacturing leaders in this sector judge the general prospects for the 2. quarter as good, with increase in production and employment.

For sectors producing consumer goods, the production was about unchanged compared with the 4. quarter 2000. Moderate increase in production is expected in the 2. quarter this year. The level of new orders received in the 1. quarter was weak, but a moderate rise is expected in the 2. quarter. The capacity utilisation is stable, about 78 per cent.

Bottlenecks in production

Lack of demand and increased competition are the main bottlenecks limiting the production in the manufacturing industry. 47 per cent of the manufacturing leaders reported lack of demand and/or increased competition in home markets as limiting factors.

For sectors producing intermediate goods, the capacity of the plants was reported as a limiting factor together with demand and competition. 24 per cent report capacity utilisation above 95 per cent.

The importance of the lack of qualified labour supply as a limiting factor for production has increased in sectors producing capital goods, and is now reported at 13 per cent. The share pointing out this problem is still far from the level of 1996 to 1998.

58 per cent of the enterprises in sectors producing consumer goods value lack of demand and/or competition in home markets as a limiting factor. Lack of supply of raw materials and/or electric power is also valued as a problem. This may be connected to the outbreak of foot and mouth disease in Europe, and problems with obtaining enough raw materials in the fish-processing industry.