Moderate business phase will continue – growth will remain slight

No real changes in business outlooks

Over the next six months the business outlook for Finnish companies is cautious and no great change is forecast for the situation. The companies that responded to the survey anticipated slight sales growth, but that personnel figures would remain the same or even decline slightly.

In October, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for winter 2016–2017. The survey concerns activity in Finland.

According to the Business Tendency Survey, recovery has been slight in all sectors, apart from construction during 2016. In manufacturing and services, the current situation is described as weaker than normal. In construction, the economic conditions are currently average.

No clear direction in business outlook – changes will be slight in near future

The general business outlook balance indicator for all companies is close to zero and no fundamental changes are expected in the economic conditions over the next six months.

Despite a slight weakening, expectations were the most positive in the service sector. The outlook indicator for service companies in October was +4 (+8 in July). The outlook indicator for construction in October was +1 (+16 in July). The outlook indicator for manufacturing was -1 (-5 in July).

Growth will continue to be weak

In manufacturing, the number of new orders received was almost unchanged but is expected to grow slightly in the coming months. The order books have recovered slightly, but are still below normal. In construction, the volume of new orders is expected to grow in the coming months. The order books are close to their usual level.

In both manufacturing and construction, output has grown slightly in early autumn. In the coming months, growth is forecast to continue, but is expected to remain sluggish, especially in manufacturing. In the service sector, sales have grown somewhat and moderate growth is also forecast for the next six months.

The capacity utilisation rate in manufacturing has risen to a modest level. In October, capacity was fully utilised in 75 % of the companies that responded (70% in July).

Slight increase in demand – major variation in profitability

While the labour force has grown slightly in construction and services, it has declined slightly in manufacturing. In the coming months, the labour force will remain stable, though it will continue to decline a little in manufacturing.

Sales prices are expected to decline in manufacturing, but they will hardly change in the other sectors. There is major variation in the profitability forecasts of companies. On average, profitability will remain at the current level over the coming months.

Demand was said to have picked up slightly compared with the start of the year, but the situation had not improved on the previous survey. Weak demand was still the most considerable obstacle to growth. It was considered a problem in about a third of businesses in all industries. Recruitment difficulties are a considerable problem in construction and certain service sectors, but these problems are clearly less common in manufacturing. In construction, they are a problem for almost one in four companies. Financing difficulties were considered an obstacle to operations in only 3–5% of the respondent companies in the main sectors.

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. In October 2016, 1,332 companies employing approximately 320,000 people in Finland replied to the survey.