Business tendency survey for manufacturing, mining and quarrying, Q1 2003

According to the Business Tendency Survey conditions for the manufacturing industry were difficult throughout the first quarter of 2003. A majority of managers report of a decline in output and capacity utilisation, and the downturn in employment seems to accelerate. Weak demand in home and export markets causes total stock of orders to fall. Average capacity utilisation is about 77 per cent, a further decline from the low value recorded in the previous survey. This indicator has experienced a significant decline throughout the past 12 months, and the number of managers that report of an average capacity utilisation of less than 50 per cent is now as high as 9 per cent, the biggest number ever recorded in this survey.

A significant number of managers continue to point at the combined effect of weak demand and growing competition as a factor that limits production. The average number of working months covered by current stock of orders is now as low as 3.1. This is mainly a result of falling stocks of orders within sectors that produce capital goods. A growing number of managers claim they consider a downward adjustment in the plans for gross capital investments.

Brighter days ahead?

The indicator covering general judgement of the outlooks for the enterprise in the next quarter has risen since the fourth quarter of 2002, but the diffusion index remains below 50. A growing number of managers expect a rise in export prices in the medium run.

Intermediate goods: Expectations of higher export prices

Sectors producing intermediate goods (pulp, paper and paper products, chemical industry, basic metals and others) report of stable development in output and capacity utilisation, but the total employment rate keep on falling. The indicator covering the development within total stock of orders fell for the third consecutive quarter and has reached a relatively low level. A significant number of managers continue to point at the combined effect of weak demand and growing competition as a factor that limits production.

General outlooks are not as negative as in the previous survey. Growing expectations of a rise in demand and stabilisation of prices in export markets supports this result. Further growth in export prices is expected in the medium run.

Capital goods: Difficult times

Sectors producing capital goods (metal products, machinery and equipment, offshore-related activity and others) are facing a difficult period featured by a decline in output, capacity utilisation and the rate of employment. Average capacity utilisation has fallen 10 per cent since the fourth quarter of 2001. Total demand appears to be weak, and the indicator covering total stock of orders has reached the lowest level ever recorded in this survey.

General outlooks are still considered to be poor. This result is supported by the fact that all indicators considering the expected development in the 2. quarter 2003 show low values. There are no signs of improvement in the medium run.

Consumer goods: Fewer expect price growth in the medium run

Sectors producing consumer goods (food industry, publishing, pharmaceutical industry and others) report of an increase in output. Failing demand and weak prices in export markets seem to constitute a growing problem.

General outlooks are slightly optimistic. A moderate majority of managers expect an increase in output, capacity utilisation and total stock of orders, but it appears to be some disturbance considering the development in exports prices. A growing number of managers expect prices to fall in the medium run.