Malta's Industrial Confidence declined in July compared to the gains registered in the previous two months.

Looking at the underlying components, this 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.

A breakdown by industrial groupings shows a substantial fall of confidence for the intermediate goods sector. This sector registered very negative balances for overall and export order books, and higher stocks of finished products.

The consumer sector also shows a decline in industrial confidence but at a smaller scale. It also registered a significant drop in order books and a worsening balance on the stocks of finished products.

On the other hand, production expectations for this sector were positive. Industrial confidence for the investment goods sector remained stable. This sector registered a fall in order books, 'below normal' stocks of finished products, and a slight improvement in production expectations.

Local and export order books

July overall order books and export order books 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.

Employment

On balance, more firms expected to decrease 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.

Stocks of finished products

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.

Price Expectations

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. The consumer goods sector followed.

Fieldwork

The July Industry Survey was carried out between July 14 and 31; 201 manufacturers, employing around 10,854 employees, replied to the survey.

The FOI will continue to monitor the outlook of manufacturing industry through its monthly surveys. This survey programme monitors the activity, perceptions and outlook of manufacturing industry in Malta and is being undertaken under the Joint Harmonised EU Programme of Business and Consumer Surveys.

The survey was made possible through the collaboration of PricewaterhouseCoopers, who assisted the FOI in designing the underlying IT system and related IT documentation.

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