Business outlook slides further in autumn

Finnish companies estimated that the economic situation had remained challenging during the autumn, according to the Business Tendency Survey carried out by the Confederation of Finnish Industries (EK) in October.

The gradual recovery of the economy has ended, and business outlooks have clearly deteriorated from that in the summer. As we head towards winter we are still in a situation of considerable uncertainty, said EK in a press release referring to the survey.

“The acceleration of the coronavirus outbreak in both Europe and Finland is already evident in the weakening of the service sectors again. The outlook for the service sector has deteriorated rapidly, as is the case throughout the business community. The situation is more challenging compared with the spring, as construction and manufacturing are now also facing problems,” said EK Chief Economic Policy Adviser Sami Pakarinen.

Business outlooks throughout the business community have declined to minus 31, whereas in July they were still on the rise at minus 11.

Based on the outlook, the coronavirus crisis is not over yet. There are considerable differences between sectors and companies. In the midst of the challenging economic situation, there is also a slight flicker of hope.

“The situation in the manufacturing sector continues to be difficult, but we can see the hint of an improvement in the outlook. The big question is whether Finland’s export industry will be able to catch up with the growth that has begun in European manufacturing and how quickly this will happen,” said Pakarinen.

Order backlogs in manufacturing and construction have declined to clearly below the normal level.

Production and sales have continued to decline, and it is difficult to anticipate a clear recovery before the amount of work starts to increase. Of the responding companies, 43% felt that insufficient demand was a problem.

“News about Europe, in particular, is worrying and Finland, too, must be prepared for even worse. …,” said EK Director-General Jyri Häkämies.

The EK survey asked businesses to evaluate their business outlook for the third quarter of 2020. A Total of 1,262 companies employing nearly 250,000 people in Finland responded to the survey.