Business cycle has nevertheless remained moderate.
According to the Business Tendency Survey carried out by the Confederation of Finnish Industries in July, Finnish companies estimated that the business cycle has remained moderate during the summer in all the main sectors. According to the survey, production and sales grew early in the year, as did the labour force.
– Companies consider the business cycle still to be favourable in general, but the pace is slowing. In the global economy, risks of slowdown are on the rise, and this will inevitably be reflected in Finland. In the worst case, growth could come to a sudden halt, says Sami Pakarinen, Chief Economic Policy Advisor at the Confederation of Finnish Industries.
– Business outlooks declined in all the main sectors. Business outlooks have been in decline for over a year already. In July, the business outlook balance indicator for manufacturing was -12, for construction it was -21, and for services it was -7. However, production and sales expectations for the autumn were at a relatively good level in all the main sectors except construction.
– Alarming signals from Europe and especially Germany are lowering expectations in Finland. Trade policy tensions further add to the uncertainty. This is apparent especially in the export-sensitive manufacturing sector, where the order backlog has already fallen below the level that is considered normal, Pakarinen says.
Recruitment difficulties continued during the summer
The availability of skilled labour was the main obstacle to production and sales growth in services and construction. 29% of service companies and 43% of construction companies had difficulties recruiting labour. Although manufacturing is also suffering from low labour availability, in manufacturing production growth is hampered most by insufficient demand.
– In many cases, the growth of companies is stalling because of low labour availability. In addition to companies, labour is also needed from the perspective of Finnish public finances. The government objective of a 75% employment rate currently requires 72,000 more employed people compared with the present situation. The employment objective combined with a weakening business cycle is a difficult equation to solve. This is why every possible measure should be employed quickly. It’s best to take action while the going is good, Pakarinen says.
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 July 2019, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for the second quarter of 2019. 1,076 companies employing over 250,000 people in Finland responded to the survey.