Industrial confidence wanes, survey shows

Industrial confidence declined in July compared to the gains registered in the previous two months, according to the Federation of Industry's latest survey among its members.

The decline was predominantly due to a significant deterioration in order books recorded throughout the whole spectrum of the manufacturing sector and a negative assessment of stocks of finished products. This decline in industrial confidence was marginally mitigated by an improvement in production expectations.

The overall order books and export order books in July were well below normal. In fact, the overall order books balance in the manufacturing sector declined from +28 in June to -50 in July. All three industrial groupings registered a decline in order books.

Similarly, export order books declined substantially compared to the previous month. The export order books balance in July was -52 compared to a balance of +38 in June. The intermediary goods sector registered the worst performance in terms of both overall order books and export order books.

On balance, more firms expected to cut their total employment over the following quarter. However, this negative balance was driven by negative employment expectations in the intermediary goods sector, which outweighed the positive balances registered in the consumer goods sector and the investment goods sector. In fact, the survey shows that, for the latter industrial groupings, there were more firms (on balance) expecting to increase employment over the following quarter.

In July, stocks of finished goods were recorded at "above normal" levels for both the consumer goods sector and the intermediate goods sector. On the other hand, the investment goods sector registered a "below normal" stock level and also saw an increase in the number of companies registering a "below normal" level of stocks compared to the previous month.

Overall, in July there were more manufacturers expecting to lower prices over the following three months than there were expecting to increase them. Such an outlook was recorded for all industrial groupings but it was more marked for the intermediary goods sector.