Business cycle remains favourable nonetheless – recruitment difficulties still a problem.
According to the Business Tendency Survey carried out by the Confederation of Finnish Industries in January, Finnish companies estimated that the good economic trend had continued late last year and early this year. The current economic conditions were described as stronger than average. The business cycle remained good in all the main sectors towards the end of last year. Production and sales also increased late in the year, according to the survey. The underperforming construction sector saw its growth improve, bringing it to the level of the other sectors. The labour force also continued to grow in all the main sectors.
Business cycle expectations weakened at the turn of the year in all the main sectors. The manufacturing business outlook balance indicator dropped to -10 in the January survey, compared to -4 as recently as October. The expectations for construction improved slightly towards the end of the year, although the outlook balance indicator remained modest at -19 (-33 in October). The expectations for the service sectors also weakened from the autumn to -6 (+3 in October).
Production and sales outlooks still favourable
Production and sales are expected to grow moderately in all the main sectors in the first months of the year. The order backlog in manufacturing was reduced to a normal level. In construction, the order backlog rose above the average. Production capacity utilisation in manufacturing remains rather good, as in January 86% of companies estimated that their capacity was fully utilised (88% in October). Expectations for the labour force are positive in all sectors except manufacturing, where the number of personnel is no longer forecast to grow.
Recruitment difficulties continue to pose a significant problem in most sectors, although the situation has eased slightly since the autumn. Out of all businesses that responded to the survey in January, 27% indicated the availability of professional labour was a barrier to growth. The biggest recruitment difficulties were faced by the construction sector. Demand has also weakened. Profitability is forecast to increase a little, the exception being the construction sector, where it is expected to weaken slightly.
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 January 2019, the Confederation of Finnish Industries asked businesses to evaluate their business conditions in the end of 2018 and the beginning of 2019. 1,184 companies employing nearly 250,000 people in Finland responded to the survey.