8 November 2013

2013- n° 256

In the manufacturing industry, business managers forecast a slight investment drop in 2014 Industrial investment survey - October 2013

Surveyed in October 2013, business managers forecast that investment in the manufacturing industry will decrease by 7% in 2013. They revised by 1 point downwards their previous expectations given in July 2013. This downwards revision concerns all sectors except the other manufacturing sector.

In 2013, the investment decrease has remained strong in the manufacturing of transport equipment (–20%) with a fall in the motor vehicles sector (–27%).

More business leaders in the manufacturing industry surveyed in October 2013 anticipated an increase than a decrease in their investment between H1 and H2 2013. More leaders anticipated a decrease than an increase in their investment between H2 2013 and H1 2014.

The investment revision indicator was still negative, but larger than in last April. Based on investment amounts reported in at each survey by business leaders of the 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 suggests that investment of these enterprises will stay at the same level at the end of 2013.

Surveyed for the first time on their 2014 investment prospects, business leaders forecast a drop by 2% in their equipment spending compared with 2013. Nevertheless, a rise is expected in the motor vehicles sector, (+6%), in the sector of manufacture of food products and beverages (+6%), and in the sector of electrical and electronic equipment, machine equipment (+2%).

According to business leaders in the manufacturing industry, the purposes of investment will be similar in 2014 than to 2013 and close to their long-term averages. Half of the investment supports the replacement and modernization of equipment (53%) slightly above its long-term average (+2 points). The share of investment meant to the increase in productive capacity or the introduction of new products (27% in 2014) is slightly lower than its long-term average (-3 points).

For 2014, 78% of industrial leaders consider that the expected profits from new investment are a stimulating factor for investment, this percentage significantly goes up to be closer to its long-term average. Demand is stimulating: the domestic demand outlook for 37% of firms (a stable percentage, lower than its long-term average) and the foreign demand outlook for 51% of firms (a rising percentage, from now on close to its long term average). The financial factors (cash flow, indebtedness, interest rates, overall financing conditions) are considered as less stimulating, but for a share which remains significantly above their long-term average.