Industrial production down 1.5 percent m-o-m and 5.7 percent y-o-y
Industrial production adjusted for working days was 5.7 percent lower in March 2012 than 12 months earlier. Seasonally adjusted output decreased in March by 1.5 percent from February. The weakness was broad-based; among the main industries, y-o-y growth was only seen in the food industry (up 1 percent). The metal industry, which has performed relatively well compared to other main sectors, saw its output fall by 1.5 percent y-o-y. The capacity utilisation rate in manufacturing was 84.5 percent in March, 1.7 percentage points higher than one year earlier. The fact that capacity utilisation has increased while output has decreased indicates that capacity has been closed down in some industries, especially in the forest industry.
External demand to improve later this year
All in all, Q1 was weak in manufacturing and exports industries as output and exports fell from 12 months back. This reflects the poor external demand emanating from the global slowdown in 2011. The cycle in Finnish exports usually lags the global demand cycle by 1-2 quarters, which might be the reason why the improved sentiment in world trade does not yet show in the Finnish statistics. Despite the structural changes in the Nokia-led electronics manufacturing and in the forest industry, we expect external demand to improve somewhat later this year, as Finnish companies’ exports are mainly oriented to the relatively better performing markets in the global economy. Furthermore, the Finnish export sector is likely to get additional support from a weaker euro. However, as the value of new orders in manufacturing declined by 5.0 percent y-o-y in Q1, we cannot expect a very robust upturn yet in Q2.