In the manufacturing industry, business managers forecast a slight investment drop in 2014Industrial 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.

Informations rapides
No 256
Paru le : 08/11/2013
Prochaine parution le : 07/11/2017 at 08:45 - October 2017

For 2013, investment expectations were revised slightly downwards

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%).

Graph1_ang – Annual nominal change in investment in manufacturing industry

Stabilization in investment in H1 2014

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.

Tab1_ang – Real annual investment growth

%
Real annual investment growth
NA* : (A17) et [A38] In 2013 In 2014
forecast Jul.13 forecast Oct.13 forecast Oct.13
C : MANUFACTURING INDUSTRY –6 –7 –2
(C1): Manufacture of food products and beverages 0 –3 6
(C3): Electrical and electronic equipment; machine equipment –1 –4 2
(C4): Manufacture of transport equipment –13 –20 3
[CL1]: Motor vehicles –25 –27 6
(C5): Other manufacturing –6 –4 –6
Total sectors (C3-C4-C5) –7 –7 –4
  • How to read this table: In manufacturing industry, business leaders surveyed in October 2013 predict a nominal investment decrease by 7% in 2013 compared to 2012 and forecast a decrease by 2% in 2014 compared to 2013.
  • * 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 remained negative in October

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.

GraphIR_ang – Investment revision indicator*

In 2014, investment will moderately drop

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%).

In 2014, the purposes of investment will be similar to those in 2013

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).

Tab2_ang – Share of purposes of investment

%
Share of purposes of investment
Average 2013 2014
1991-2013 forecast forecast
Replacement 27 32 30
Modernization, streamlining 24 23 23
of which : automation 11 8 8
of which : new production methods 7 6 7
of which : energy savings 6 9 8
increase in productive capacity 16 13 14
Introduction of new products 14 12 13
Other purposes (safety, environment, working conditions…) 20 20 20

    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.

    Tab3o_ang – Factors influencing investment decisions

    Balance of opinion, as % of responses
    Factors influencing investment decisions
    Average in 2013 in 2014
    1991-2013 (observation) (prediction)
    Domestic-demand outlook 49 36 37
    Foreign-demand outlook 53 46 51
    Expected profits from new investment 83 68 78
    Cash flow 16 19 18
    Indebtedness –4 1 3
    Interest rates 5 20 18
    Overall financing conditions 11 19 18
    Technical factors (1) 63 60 63
    Other factors (such as tax incentives) 22 23 23
    • Technological developments and need for labor to adjust to these new technologies
    • For each factor, the balance of opinion is calculated as the difference between the percentage of stimulating answers and the percentage of limiting answers.