11 May 2011

2011- n° 119

In manufacturing industry, business managers forecast a rebound of investment by 15% in 2011 Industrial investment survey - April 2011

Surveyed in April 2011, business managers report that investment in manufacturing industry stabilized in 2010 comparing to 2009. For 2011, they always forecast a dynamic rebound in investment.

In April, business leaders in manufacturing industry revised by 1 point upwards the rebound of their investment for 2011 comparing to the previous survey, in January. They forecast an increase by 15% comparing to 2010. Investment would rebound in sectors of manufacture of food products and beverages (+11% in 2011 after -4% in 2010) and in sectors of manufacture of transport equipment (+6% in 2011 after -7% in 2010), even if investment would slightly decrease in sector of motor vehicles. Beside, investment would be sharply more important in 2011 (+19%) than in 2010 (+2%) in other manufacturing’s sectors as manufacture of wood, paper products and printing, manufacture of basic metals and fabricated metal products and manufacture of rubber and plastics products, and other non-metallic mineral product.

Business leaders in manufacturing industry are reporting that investment increases in H1 2011 comparatively to H2 2010. They anticipate also that investment in H2 2011 would be more important than in H1 2011.

According to business leaders in manufacturing industry, the share of purposes of investment would slightly change in 2011 comparing to 2010. The proportion of investment purposed to replacement would decrease at 27%, a level closed to its long-term average (26%). The share of investment purposed to introduction of new products (13%) and energy savings (7%) would also decrease. On the contrary, the share of investment for other purposes as safety, environment, working conditions would increase by 2 points at 23% vs. 20% on average. The share of investment purposed to increase in productive capacity (14%) or in automation (8%) would increase by 1 point.

Business leaders in manufacturing industry are more optimistic concerning the change in productive capacity for 2011 : the corresponding balance of opinion is 10 points higher than the balance of opinion for 2010. Nevertheless, this balance of opinion is still lower than its long-term average. According to the forecast of business leaders, the share of enterprises reporting equipment scrapping in 2011 would still be at a low level : 69% vs. 78% in average. The rate of equipment scrapping for wear and tear, and obsolescence would increase by 2 points at 52%. The share of equipment scrapping due to installation of more efficient equipment would increase by 1 point at 29% but would still be lower than in average (32%). The share of equipment scrapping due to shut-down of capacity for old products would stay at a high level : 15% vs. 12% in average.

The investment revision indicator lift up. That suggest that investment will increase at Q2 2011. 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.