Economic conditions continue to be fairly favourable nonetheless – insufficient demand poses a problem.
According to the Business Tendency Survey carried out by the Confederation of Finnish Industries in April, Finnish companies estimated that the positive economic trend had continued in the first months of this year. The current economic conditions were described as stronger than average. The business cycle remained quite favourable in all the main sectors during the spring. This trend is consistent with the economic growth that has taken place in Finland. According to the survey, production and sales also grew early in the year, as did the labour force. The trend was positive in all the main sectors.
Business outlooks, on the other hand, were weak in all the main industries this spring. The manufacturing business outlook balance indicator improved slightly to -8 in the April survey, compared to -11 in January. Similarly, the expectations for construction improved slightly in the spring, although the outlook balance indicator remained modest at -8 (-19 in January). Expectations in the service sectors were cautious, as the outlook balance indicator was -4 (-5 in January).
Production and sales outlooks still positive
Production and sales are expected to grow moderately in all the main sectors in the first half of the year. The order backlog in manufacturing remained at its normal level. In construction, the order backlog has stayed above average. Production capacity utilisation in manufacturing remains rather good, as in April 84% of companies estimated that their capacity was fully utilised (86% in January). Expectations for the labour force have deteriorated in all sectors except services, where the number of personnel is forecast to grow in the summer months.
Uncertainty in the global economy is reflected in barriers to growth in production. Inadequate demand has become the key problem in both manufacturing and services. Of all business respondents, 28% singled out insufficient demand as the main barrier to growth in production and sales. Similarly, recruitment difficulties are still a major problem, especially in construction. Profitability is forecast to increase slightly, 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 April 2019, the Confederation of Finnish Industries asked businesses to evaluate their business outlooks for the first half of 2019. 1,192 companies employing nearly 250,000 people in Finland responded to the survey.