Diverging Confidence Indicators in February

Business confidence in Finland remained largely unchanged in February. Developments differed somewhat across sectors: confidence in manufacturing and retail trade strengthened, the indicator declined in services, and confidence in construction remained low.

Manufacturing confidence indicator strengthened

The manufacturing confidence indicator strengthened slightly in February. The latest balance figure is +3, compared with a revised figure of 0 points in the previous month. Confidence is close to its long-term average level (0 points).

Production expectations are favourable, and production growth is forecast to continue broadly in the coming months. Order books improved from the previous month but remain below average. Inventories of finished goods stayed close to the average level. There is still clearly spare capacity: in February, 57% of respondents reported operating at full capacity (the revised figure for January was 66%).

In Finland, manufacturing confidence in January was slightly above the EU average.

Construction confidence remained low

There were no major changes in construction confidence, and the confidence indicator remains at a low level. The latest reading is −24, compared with −22 in January. Confidence is clearly weaker than the long-term average (−9).

According to construction companies, order books remain very weak. Employment expectations for the coming months have also remained cautious, and no increase in employment is expected.

In January, confidence among Finnish construction companies was the second weakest among EU countries.

Services confidence indicator weakened slightly

Confidence in the private services sector weakened somewhat in February, but the indicator remained on a gentle upward trend. The latest reading is +3, compared with a balance figure of +8 in January. The long-term average of the time series is +11.

Overall economic conditions are assessed to have remained rather modest in recent months. Nevertheless, sales have continued to grow gradually, and growth is expected to accelerate slightly in the coming months.

In Finland, services confidence in January was slightly below the EU average.

Retail trade confidence strengthened

Retail trade confidence improved in February. The confidence indicator rose to a balance figure of +9, compared with +6 in January. The long-term average of the indicator is −2.

Growth in retail sales accelerated slightly. Growth is expected to continue strengthening in the coming months. Inventories increased somewhat, and their level is slightly above average.

Finland’s retail trade confidence indicator was close to the EU average in January.