In the manufacturing industry, business managers forecast that investment will slightly decrease in 2015 after being steady in 2014Industrial investment survey - October 2014

Surveyed in October 2014, business managers forecast that investment in the manufacturing industry will be steady in 2014. They revised by 1 point downwards their previous expectations given in July 2014.

Informations rapides
No 255
Paru le : 07/11/2014
Prochaine parution le : 06/02/2018 at 08:45 - January 2018

For 2014, business managers forecast that investment will be steady

Surveyed in October 2014, business managers forecast that investment in the manufacturing industry will be steady in 2014. They revised by 1 point downwards their previous expectations given in July 2014.

This downward revision concerns all sectors except the manufacture of transport equipment. For this sector, investment will decrease by 1% after a forecast of –5% in July.

In 2015, investment in manufacturing industry is likely to decrease

On aveage over 2015, business leaders forecast a slight drop of 3% in their equipment spending compared with 2014. This drop is expected in all sectors. It would be notable in the sector of manufacture of transport equipment (-8%) and in the manufacture of food products and beverages (–8%).

Graph1_ang – Annual nominal change in investment in manufacturing industry

Tab1_ang – Real annual investment growth

%
Real annual investment growth
NA* : (A17) et [A38] In 2014 In 2015
forecast Jul.14 forecast Oct.14 forecast Oct.14
C : MANUFACTURING INDUSTRY 1 0 –3
(C1): Manufacture of food products and beverages 6 4 –8
(C3): Electrical and electronic equipment; machine equipment 8 4 –1
(C4): Manufacture of transport equipment –5 –1 –2
[CL1]: Motor vehicles –1 2 –8
(C5): Other manufacturing –1 –1 –3
Total sectors (C3-C4-C5) 0 0 –2
  • How to read this table: In manufacturing industry, firms surveyed in October 2014 forecast that investment will be steady in 2014 and a decrease by 3% in 2015 comparing to 2014.
  • * The codes correspond to the level of aggregation (A17) and [A38] of the "NA" aggregate classification based on NAF rev.2.

Stable behaviour in H1 2015

Business leaders that anticipated an increase between H1 2014 and H2 2014 were as numerous as business leaders that anticipated a decrease. This is also true for H1 2015.

Graph2_ang – Opinion of industrials regarding six-month change in investment (first estimation*)

In 2015, the investment incentives is likely to be similar to those of 2014

In 2015, according to business leaders in the manufacturing industry, the purposes of investment will be similar to those of 2014. Slighltly more than half of the investment supports the replacement and modernization of equipment (53%), slightly above its long-term average. The share of investment meant to increase productive capacity or to ontroduce new products (26% in 2015) is slightly lower than its long-term average (–4 points).

Tab2_ang – Share of purposes of investment

%
Share of purposes of investment
Average 2014 2015
1991-2014 forecast forecast
Replacement 27 29 30
Modernization, streamlining 24 24 23
of which : automation 11 9 8
of which : new production methods 7 6 6
of which : energy savings 6 9 9
increase in productive capacity 16 15 13
Introduction of new products 14 12 13
Other purposes (safety, environment, working conditions…) 20 20 21

    According to industrial leaders, the expected profits will stimulate investment in 2015 more than in 2014. However the corresponding balance of opinion is lower than its long-term average.

    The domestic-demand outlook and to a lesser extent the foreign-demand outlook are less stimulating factors: the balances of opinion are significantly lower than their long-term average of respectively 16 points and 4 points. The financial factors (cash flow, indebtedness, interest rates, overall financing conditions) are considered to be stimulating for a share that remains significantly above its long-term average.

    Tab3o_ang – Factors influencing investment decisions

    Balance of opinion, as % of responses
    Factors influencing investment decisions
    Average in 2014 in 2015
    1991-2014 (observation) (prediction)
    Domestic-demand outlook 49 36 33
    Foreign-demand outlook 53 47 49
    Expected profits from new investment 83 73 77
    Cash flow 16 19 16
    Indebtedness –3 4 2
    Interest rates 5 27 27
    Overall financing conditions 12 24 26
    Technical factors (1) 63 59 62
    Other factors (such as tax incentives) 22 24 26
    • (1) 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.

    Given the investment revision indicator, investment is likely to be steady at the end of 2014

    Investment of non-financial enterprises is likely to be steady at the end of 2014. In October, the investment revision indicator was slightly positive: based on investment amounts reported in at each survey by business leaders of the manufacturing industry (manufacture of food products and beverages and coke and refined petroleum products excepted), this indicator is well-correlated with quarterly gross fixed capital formation of non-financial enterprises.

    GraphIR_ang – Investment revision indicator