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Fast Comment FinlandStill decent manufacturing output in Finland

  1. Finnish industrial output grew 1.6 percent y-o-y in November
  2. Value of new manufacturing orders plunged, due to strong reference month
  3. Finnish industry still holding up reasonably well, although somewhat feeling the global manufacturing slowdown
Finnish industrial output grew by 1.6 percent y-o-y in November
The output of total industries, adjusted for working days, increased by 1.6 percent y-o-y in November 2018. In m-o-m terms, seasonally-adjusted industrial output increased by 0.4 percent. During January-November, the output of total industries rose by 3.9 percent y-o-y. In total manufacturing, the volume of output increased by 1.5 percent y-o-y, 0.3 percent m-o-m and in January-November output grew by an average of 3.2 percent from the previous year.
Value of new manufacturing orders plunged, due to strong reference month
Industrial output increased in several of the main industries. According to Statistics Finland, production grew most in mining and quarrying, by 4.6 percent m-o-m, while in the production of electricity, gas, steam and air conditioning output grew by 4.3 percent m-o-m. Total output decreased most in electrical and electronics industry, by 6.7 percent m-o-m. The value of new manufacturing orders fell by 37.6 percent y-o-y. The main reason for the large drop in new orders was the strong reference month in November 2017, which contained a few large shipbuilding industry orders. Nevertheless, the new manufacturing orders index was weak in November 2018. According to the preliminary statistics for the foreign trade of goods, provided by Finnish Customs, the value of Finnish goods exports increased by 9 percent y-o-y in November, whereas the value of goods imports increased by 5 percent. During January-November, the value of goods exports and imports both increased by 7 percent. However, goods exports volume (deflated by exports prices) grew by only 2.0 percent y-o-y during January-November.
Finnish industry still holding up reasonably well, although somewhat feeling the global manufacturing slowdown
Despite the global manufacturing slowdown in late 2018, Finnish industrial production was still holding up reasonably well in November. Output growth somewhat decreased during the last months of 2018, but it has not, at least yet, felt the same hit as German manufacturing. However, Finnish industry is by no means immune to global developments. The year-on-year growth in exports volume went into negative territory already last summer, yet in October-November it clearly recovered. Also, the growth in order books and manufacturing sentiment as a whole is now pointing downward. Finnish GDP data revealed a strong increase in manufacturing inventories in Q3 2018. To our knowledge, that is due to problems in the supply chains of Finnish engineering companies. The flip side of large stock of inventories was weak exports in Q3. We find it probable that companies will deliver from those inventories as products are finished, hence we expect a pick-up in exports, especially in exports of investment goods in Q4. The strong acceleration in growth of goods export seen in November points to that, in our view.

 



Disclaimer

Janne Ronkanen

Senior Economist

Finland

jaro06@handelsbanken.se

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