Manufacturing sector confidence still fragile, FOI survey shows

Industrial confidence was reported negative in August although not as bad as the mood had been the previous month, according to the latest survey conducted by the Federation of Industry among its members.

Overall, manufacturers reported "below normal" order books and a negative assessment of stocks of finished products, the FOI said.

The survey also shows that firms have scaled back their production expectations for the next three months.

The survey shows 22 per cent of firms reporting "below normal" order books and 10 per cent reporting "above normal" order books. The overall order book balance in August was -12 compared with -50 registered in July. Similarly, the survey shows a negative balance of -12 for export order books compared to -52 registered in the previous month.

The consumer goods sector and the intermediate goods sector registered less negative overall and export order books, while the investment goods sector registered an upturn for the same indicators.

Manufacturers reported relatively "above normal" stocks of finished products but to a lesser extent than those registered in July. Stocks of finished goods were recorded at "above normal" levels for both the consumer goods sector and the intermediate goods sector. However, there were fewer companies, in both of the above sectors, reporting such an outcome. On the other hand, the Investment goods sector registered a "below normal" stock level.

The survey reports that, in August, manufacturing firms saw their pricing power weaken even further. Overall, there were more firms in August compared to July reporting they will decrease selling prices for the next three months. The sharpest drop in pricing power was registered for the consumer goods sector followed by the investment goods sector. The pricing power of the intermediate goods sector remained relatively stable.

On balance, more manufacturing firms expected to decrease their total employment levels over the following quarter. The balance registered in August for this indicator was -9 compared to a -19 balance registered for the previous month. These negative employment expectations were mainly driven by negative employment expectations for the consumer goods sector (-23 in August compared to +11 in July), which outweighed the positive balance registered for the investment goods sector (+10 in August compared to +3 registered in July). The intermediate goods sector reported a zero balance in terms of employment expectations compared to a balance of -52 in July.