24 July 2018

2018- n° 186

In July 2018, the business climate falters slightly in manufacturing but remains at a high level Monthly business survey (goods-producing industries) - July 2018

According to the business managers surveyed in July 2018, the business climate in industry has slightly edged down. The composite indicator has decreased by one point as in June, after having recovered slightly in May. At 108, it remains well above its long-term average (100).

The turning-point indicator remains in the uncertainty area.

Manufacturers are considerably less optimistic than at the beginning of the year about the general production prospects for the sector. Nevertheless, the corresponding balance remains well above its long-term average. Their opinion on overall and export order books have slightly further deteriorated. At the beginning of the year, the corresponding balances had reached levels not seen since December 2007.

The balance of industrialists' opinion on personal production expectations has slightly decreased after reaching in June its highest level since November 2000. That on past activity has edged down by one point back to its long-term average.

As many industrialists as in June consider that their finished-goods inventories are above normal. The corresponding balance is below its long-term mean.

As regards employment, the balance of opinion on expected workforce size has fallen back while that on past workforce size remains stable. Both balances are well above their long-term average.

In the manufacture of food products and beverages, the business climate indicator has narrowed in July (–4 points). At 107, it still considerably exceeds its long-term average (100). This deterioration mainly comes from a decrease in the balances on overall and export order books.

In the overall manufacture of machinery and equipment goods, the business climate has decreased by one point, at 107, while remaining well above its long-term average. This dip is attributable to the decrease in the balance on past activity.

The business climate is less favourable in the electrical equipment industry and in machinery and equipment than in June. By contrast, it has improved in the computer, electronic and optical product industry.

In the manufacture of transport equipment, the business climate has fallen by four points. At 106, it remains above its long-term average (100). This deterioration mainly comes from the decrease in the balance on overall order books, in particular in the motor vehicles, trailers and semi-trailers industry.

The business climate indicator has decreased in the manufacture of motor vehicles, trailers and semi-trailers, and slightly less in the manufacture of other transport equipment. In both cases, the climate remains above average.

In overall “other manufacturing”, the business climate is slightly more favourable. The composite indicator has edged up by 1 point. This improvement mainly comes from the increase in the balance on personal production expectations.

By subsector, the business climate indicator has brightened in rubber and plastic products. It is stable in chemicals and in the “other manufacturing industries” and has fallen in wood-paper, clothing-textiles and basic metals.

The business climate in manufacturing in June 2018 has been lowered from 110 to 109 since its first estimation published last month, mainly due to the inclusion of late responses from businesses.