7 May 2020

2020- n° 116

Business managers in manufacturing industry are expecting their investment to fall in 2020 Industrial investment survey - April 2020

The business managers in industry surveyed in April 2020 have anticipated a fall of their investment of 7% in nominal terms in 2020 as compared to 2019. Thus, they have lowered by 10 points their estimate given last January, whereas on average the revision in April is zero. For the year 2019, business managers have estimated their investment to have grown by 3% in nominal terms as compared to 2018.

Business managers have estimated the overall rise of their investment at 3% in 2019. Thus, they have slightly updated upwards their January 2020 estimate.

In 2019, investment is likely to have receded in the agri-food industry (-6% after +1% in 2018) and remained stable in the sector of electrical, electronic and machine equipment after two bright years (+25% in 2017 and +8% in 2018). Investment in the “other manufacturing” sector appears to have kept its 2018 pace (+4%). However, investment in the transport equipment sector is likely to have bounced markedly (+13%) after two years of clear decrease (-8% in 2017 and -5% in 2018).

For the year 2020, business managers have forecasted an average fall of 7% in nominal terms in their investment compared to 2019. Investment should fall drastically in the transport equipment sector (-16%). The decline in investment in the “other manufacturing” sector and in the agri-food industry should not be as severe (-7% for the former, -3% for the latter). At last, investment in the equipment good sector is likely to remain stable.

Industrialists thus have lowered their January estimate for 2020 by 10 points.

The business managers’ estimate for 2020 may be revised over the next quarters. On average since 2003, the forecast issued in April has been 4 points above the value ultimately declared in July of the following year.

The industrialist’ balance of opinion related to investment change over the past half-year has lost 18 points for the first semester 2020 as compared to the second semester 2019, and now lies at -10.

In addition, for the second semester 2020, the balance of opinion regarding investment in the next half-year has last 15 points as compared to the balance for the first semester 2020 calculated in October 2019, and now stands at -9.

The balance of opinion regarding the variation in productive capacity in the year to come has stepped back markedly. Furthermore, the share of companies expecting to downgrade equipment in 2020 has strongly diminished, which could signal that industrialists intend to keep longer than usual their current equipment.

The share of companies declaring to have downgraded equipment in 2019 is already lower than its average. Likewise, the balance of opinion on the observed change in productive capacity in 2019 is already lower than its average.