EK Business Tendency Survey: Companies’ business outlooks remain gloomy

According to the Confederation of Finnish Industries’ (EK) April Business Tendency Survey, Finnish businesses’ estimates of the economic cycle have remained at the levels of the crisis period. Companies’ business outlooks have improved slightly on the January survey, but are still clearly muted. Construction and manufacturing are being hit particularly hard by the economic downturn. The service sectors, on the other hand, have continued to support the Finnish economy and, in particular, employment in recent months.

“The prolonged weakening of the business cycle has been chipping away at companies’ profitability. The widespread strikes organised by trade unions also affected businesses considerably, as this was mentioned in relation to obstacles to growth. The strikes were particularly damaging for manufacturing. According to the responding companies, no improvement in profitability is to be expected in the coming months either, so the tough times will continue until Midsummer at least,” says Sami Pakarinen, Director at the Confederation of Finnish Industries.

Production and sales have declined in recent months. Businesses expect the decline to continue also over the next three months. In manufacturing and services, production is expected to start growing again in six months’ time. The decline in production is already clearly reflected in private sector employment. Businesses’ estimates of the trend in personnel numbers continue to be negative also for the coming months.

“Employment has been weakening for several months now. As we know, employment has a delayed reaction to production, so it will be next year before there is an improvement in employment,” Pakarinen continues.

The main obstacle to growth continues to be insufficient demand. Half of the responding companies reported insufficiency of demand as an obstacle to growth. Problems with the availability of skilled labour have continued to ease with the economic downturn.

“The responses from businesses suggest that the economy will get even weaker before we see an improvement. There is potential for growth to start in the second half of the year, but a lot of hopes have also been pinned on one card – a reduction in interest rates,” says Pakarinen.

EK Business Tendency Survey

The Business Tendency Survey is published four times a year by the Confederation of Finnish Industries (EK). The survey has been carried out regularly since 1966. It is part of the European Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, which is partially funded by the EU. The survey concerns activity in Finland. In April 2024, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for the first quarter of 2024. A total of 1,227 companies employing about 290,000 people in Finland responded to the survey.