9 November 2010

2010- n° 273

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

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

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.

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.

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%).

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%).

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.