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Fast Comment FinlandFinnish industry still holding up reasonably well

  1. Manufacturing grew 2.6 percent y-o-y in June
  2. Solid growth in goods exports in H1 despite June decline
  3. Declining manufacturing orders are a concern
Manufacturing grew 2.6 percent y-o-y in June
Finnish manufacturing is still posting growth despite the broad-based slowdown in eurozone manufacturing, primarily in Germany. The output of total industries adjusted for working days increased by 2.6 percent y-o-y in June 2019. In m-o-m terms, the seasonally-adjusted industrial output increased by 1.2 percent. Production increased most in the electrical and electronics industry, by 12.3 percent m-o-m, while production decreased most in the forestry industry, by 2.5 percent m-o-m. During the first half of the year, the output of total industries rose by 1.9 percent y-o-y. Instead, the value of new manufacturing orders fell by 4.8 percent y-o-y in June. However, this was the first month of the year when the annual change was negative; in total, new manufacturing orders still increased by 1.8 percent y-o-y in H1 2019.
Solid growth in goods exports in H1 despite June decline
According to the preliminary statistics of foreign trade of goods provided by Finnish Customs, the value of Finnish goods exports decreased by 3 percent y-o-y in June, whereas the value of goods imports decreased by 10 percent. During H1 2019, the value of goods exports increased by 4 percent and the value of goods imports decreased by 1 percent. Goods export volumes (deflated by export prices) grew by 2.6 percent y-o-y in H1.
Declining manufacturing orders are a concern
The global manufacturing malaise is yet to hit Finnish industries. The performance in the first half of the year is admittedly better than had been expected both for Finnish manufacturing and for exports. This is particularly the case accounting for the problems in manufacturing in Germany, which is Finland’s biggest trading partner. However, the recent decline in the new manufacturing orders index should be noted as a sign of concern, although orders typically show substantial monthly fluctuations. There was a marked increase in inventories in late 2018, and some of the improvement we have seen in Finnish exports this year is probably linked to this inventory reduction. We expect Finnish goods exports to remain in a moderate growth mode this year, as there should be additional support from a cruise ship delivery in October. As goods imports are declining at the same time, net exports will most likely deliver a positive contribution to Finnish GDP growth this year. This is essential, as the domestic demand has clearly weakened.

 



Disclaimer

Janne Ronkanen

Senior Economist

Finland

jaro06@handelsbanken.se

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