Producer confidence down again

The producer confidence index dropped for the second month in a row in July 2010. The indicator stood at -2.4 versus -0.7 in June. Manufacturers were less optimistic about output in the next three months.

Producer confidence consists of three component indicators: producers’ opinions on stocks of finished products, their opinions on their order books and expected output in the next three months.

Producers were less optimistic about their future output than in June. While in June manufacturers were expecting an increase in future output, in July they foresaw a stable production in the coming three months. Manufactures were also less positive about their stocks of finished products in July. Opinions on their order position improved, but manufacturers who are pessimistic about their order position still outnumbered their optimistic counterparts.

Manufacturers indicated that their competitive position had improved slightly in the second quarter. The most substantial improvement was on the non-EU foreign market. Manufacturers were still optimistic about their future sales abroad in July, but to a lesser degree than in the previous quarter. Insufficient demand was considered by 25 percent of manufacturers as a factor to slow down production, as against 30 percent in April.

The capacity utilisation rate rose from 78.7 percent in April to 80.2 percent in July. In spite of the increase, the rate was still extremely low. Over the past two decades, manufacturing industry continually used between 80 and 87 percent of its production capacity.

Producer confidence in manufacturing industry