In manufacturing industry, business managers forecast an increase more moderated in investment in 2012 : +4% after +11% in 2011Industrial investment survey - October 2011

Surveyed in October 2011, business managers forecast that investment in manufacturing industry would increase by 11%. They revised 3 points downwards their previous expectations given in July 2011. This revision downwards concern all sectors of manufacturing industry.

Informations rapides
No 273
Paru le : 09/11/2011
Prochaine parution le : 06/02/2018 at 08:45 - January 2018

For 2011, expectations of investment were revised downwards

Surveyed in October 2011, business managers forecast that investment in manufacturing industry would increase by 11%. They revised 3 points downwards their previous expectations given in July 2011. This revision downwards concern all sectors of manufacturing industry.

In 2011, the increase of investment would be strong in sectors of other manufacturing (+13%) as manufacture of chemicals and chemical products, manufacture of wood, paper products and printing, manufacture of rubber and plastics products, and other non-metallic mineral product and manufacture of basic metals and fabricated metal products. On the contrary, in sector of motor vehicles investment would decrease by 5%.

Graph1_ang – Annual nominal change in investment in manufacturing industry

Industrials confirm the dynamism of investment in H2 2011

Between H1 and H2 2011, industrials forecast an increase of their investment, as in last April. Moreover, they forecast that investment would be less dynamic in H1 2012 than in H2 2011.

Tab1_ang – Real annual investment growth

%
Real annual investment growth
NA* : (A17) et [A38] In 2011 In 2012
forecast Jul.11 forecast Oct.11 forecast Oct.11
C : MANUFACTURING INDUSTRY 14 11 4
(C1): Manufacture of food products and beverages 11 6 4
(C3): Electrical and electronic equipment; machine equipment 10 6 3
(C4): Manufacture of transport equipment 7 4 17
[CL1]: Motor vehicles 1 –5 25
(C5): Other manufacturing 16 13 3
  • How to read this table: In manufacturing industry, firms surveyed in October 2011 observed a nominal investment increase by 11% in 2011 comparing to 2010 and forecast an increase by 4% in 2012 comparing to 2011.
  • * 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*)

But, the investment revision indicator becomes negative in October

The investment revision indicator becomes negative. 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 of these enterprises will decrease at the end of 2011.

GraphIR_ang – Investment revision indicator

In 2012, investment would be less dynamic

Surveyed for the first time on their investment’s estimate for 2012, business leaders forecast their equipment expenditures would be less dynamic: +4% comparing to 2011. In sector of motor vehicles the rebound in investment would be important : +25%. But at the same time, investment would be less dynamic in sectors of other industries (+3%).

In 2012, the purposes of investment would be similar to those in 2011

According to business leaders in manufacturing industry, the purposes of investment would be similar in 2012 than to 2011. The part of investment purposed to replacement of equipment (28%), to other purposes (22%) as safety, environment, working conditions and to energy savings (9%) would be more important than in long-term average (respectively 26%, 20% and 5%). On the other hand, the part of investments purposed to extension of productive capacity (13%) and automation (7%) would be, as in 2011, lower than in average (respectively 16% and 11%).

Tab2_ang – Share of purposes of investment

%
Share of purposes of investment
Average 2011 2012
1991-2011 forecast forecast
Replacement 26 28 28
Modernization, streamlining 24 23 23
of which : automation 11 8 7
of which : new production methods 7 6 7
of which : energy savings 6 9 9
increase in productive capacity 16 13 13
Introduction of new products 14 14 14
Other purposes (safety, environment, working conditions…) 20 22 22

    According to business leaders, most of supports of investment decisions are less favorable for 2012

    For 2012, business leaders estimate less favorably all the supports of investment, except the expected profits. They expect that demand, interest rates as overall financing conditions would be markedly less favorable: balance of opinion for 2012 are clearly inferior to those for 2011. Moreover, business leaders expect that indebtedness is more unfavorable than usually.

    Tab3o_ang – Factors influencing investment decisions

    Balance of opinion, as % of responses
    Factors influencing investment decisions
    Average in 2011 in 2012
    1991-2011 (observation) (prediction)
    Domestic-demand outlook 51 50 45
    Foreign-demand outlook 54 56 52
    Expected profits from new investment 84 84 84
    Cash flow 15 15 14
    Indebtedness –4 –5 –9
    Interest rates 3 4 1
    Overall financing conditions 10 13 10
    Technical factors (1) 63 64 62
    Other factors (such as tax incentives) 22 26 25
    • (1) Technological developments and need for labor to adjust to these new technologies