In manufacturing industry, business managers forecast a rebound in investment in 2011 : +9% after -2% in 2010Industrial investment survey - October 2010

Surveyed in October 2010, business managers forecast that investment in manufacturing industry would decrease of 2%. They revised 7 points downwards their previous expectations given in July 2010. The revision downwards is particularly important in sectors of motor vehicles (-15 points) and of other manufacturing (-7 points) as manufacture of wood, paper products and printing, pharmaceutical industry, manufacture of rubber and plastics products, and other non-metallic mineral product and manufacture of basic metals and fabricated metal products.

Informations rapides
No 273
Paru le : 09/11/2010
Prochaine parution le : 07/11/2017 at 08:45 - October 2017

For 2010, expectations of investment in manufacturing industry were revised downwards

Surveyed in October 2010, business managers forecast that investment in manufacturing industry would decrease of 2%. They revised 7 points downwards their previous expectations given in July 2010. The revision downwards is particularly important in sectors of motor vehicles (-15 points) and of other manufacturing (-7 points) as manufacture of wood, paper products and printing, pharmaceutical industry, manufacture of rubber and plastics products, and other non-metallic mineral product and manufacture of basic metals and fabricated metal products.

In 2010, the decrease of investment would still be strong in sectors of motor vehicles (-11%) and manufacture of food products and beverages (-7%).

Graph1_ang – Annual nominal change in investment in manufacturing industry

However, industrials confirm the rebound of investment in H2 2010

Between H1 and H2 2010, industrials forecast an increase of their investment, as in last April. Moreover, they forecast that investment would be more important in H1 2011 than in H2 2010.

Tab1_ang – Real annual investment growth

%
Real annual investment growth
NA* : (A17) et [A38] In 2010 In 2011
forecast Jul.10 forecast Oct.10 forecast Oct.10
C : MANUFACTURING INDUSTRY 5 –2 9
(C1): Manufacture of food products and beverages –3 –7 –2
(C3): Electrical and electronic equipment; machine equipment 11 9 3
(C4): Manufacture of transport equipment 2 –8 10
[CL1]: Motor vehicles 4 –11 7
(C5): Other manufacturing 6 –1 12
  • How to read this table: In manufacturing industry, firms surveyed in October observed a nominal investment decrease by 2% in 2010 comparing to 2009 and forecast an increase by 9% in 2011 comparing to 2010.
  • * The codes correspond to the level of aggregation (A17) and [A38] of the "NA" aggregate classification based on NAF rev.2.

Graph2_ang – Opinion of industrials regarding six-month change in investment (first estimation*)

The investment revision indicator is still positive in October

The investment revision indicator is still positive. Based on investment amounts filled in at each survey by business leaders of manufacturing industry except those of manufacture of food products and beverages (C1) and of coke and refined petroleum products (C2), this indicator is well-correlated with quarterly growth fixed capital formation of non-financial enterprises. That suggest that investment will increase at the end of 2010.

GraphIR_ang – Investment revision indicator*

In 2011, investment would rebound of 9%

Surveyed for the first time on their investment’s estimate for 2011, business leaders forecast a rebound in their equipment expenditures: +9% comparing to 2010. The rebound in investment would be important in sectors of manufacture of transport equipment (+10%) and of other manufacturing (+12%).

In 2011, the share of investment purposed to increase in productive capacity and automation would be still weak

According to business leaders in manufacturing industry, the purposes of investment would be similar in 2011 than to 2010. The share of investment purposed to replacement of equipment (28%), to energy savings (7%) and to other purposes (22%) as safety, environment, working conditions would stabilize and would be more important than in long-term average (respectively 26%, 5% and 20%). Moreover the share of investments purposed to extension of productive capacity (14%) and automation (8%) would be lower than in average (respectively 16% and 12%).

Tab2_ang – Share of purposes of investment

%
Share of purposes of investment
Average 2010 2011
1991-2010 forecast forecast
Replacement 26 28 28
Modernisation, streamlining 24 22 23
of which : automation 12 8 8
of which : new production methods 7 7 8
of which : energy savings 5 7 7
increase in productive capacity 16 14 14
Introduction of new products 14 14 13
Other purposes (safety, environnement, working conditions…) 20 22 22

    According to business leaders, most of the supports of investment decisions are more favorable for 2011

    For 2011, business leaders estimate more favourably most of the supports of investment. Their opinions concerning demand, technical factors and other factors such as tax incentives have improved. They also expect that overall financing conditions and interest rates would stay favorable: balance of opinion are largely superior to the long-term average.

    On the contrary, business leaders in industry state that indebtness still limitate their investment.

    Tab3o_ang – Factors influencing investment decisions

    Balance of opinion, as % of responses
    Factors influencing investment decisions
    Average in 2010 in 2011
    1991-2010 (observation) (prediction)
    Domestic-demand outlook 49 20 17
    Foreign-demand outlook 54 17 17
    Expected profits from new investment 83 66 64
    Cash flow 13 –4 –8
    Indebtness –6 –14 –16
    Interest rates 1 9 12
    Overall financing conditions 7 0 1
    Technical factors (1) 62 51 53
    Other factors (such as tax incentives) 21 26 27
    • (1) Technologicals developments and need for labour to adjust to these new technologies