In August, the expectations of the Lithuanian industry improved: more like reconciliation than optimism | Business

The more optimistic assessment after four months was mainly due to improved expectations for industrial production in the coming months and slightly improved expectations for industrial demand. Order volumes in the industry, having improved somewhat since the beginning of this year, remain stable (neither increasing nor decreasing significantly). Stock levels are adequate, not too high. The demand in the export markets is basically unchanged, although, for example, companies in the textile and clothing sectors expect a further decline in production exports.

Although such trends in industry expectations, which record relative optimism, could be interpreted as companies adapting to smaller, non-growing volumes of demand for their products, even in more than one industry sector, moods of reducing the number of employees are increasing. A rare company expects sales growth. A certain calm prevails.

Company photo/Industry Expectations Index

Although the majority of companies do not plan to change the number of employees, almost every sixth textile manufacturing company and almost every third clothing sewing company are in the mood of downsizing. The sector faces aggressive competition from Asian producers, which is hampered by high production costs in Lithuania. Companies in the manufacturing sector of metal products, excluding machinery and equipment, are also affected by similar sentiments.

The latter face a significant lack of demand in export markets (orders from the German automotive industry are still stuck). Almost every second company in the computer, electronic and optical products and rubber and plastic products production sectors will decide on the issue of increasing the number of employees in the near future.

Production capacity utilization in August. reached 72.4 percent. and was 0.4 percent. point higher than in July. This capacity utilization result is lower than the long-term capacity utilization rate of 75 percent. (August 2015-2024). Higher than average capacity utilization in industry was only in the food production (87.4%), metal products excluding machinery and equipment (84.9%) and textile production (74.7%) sectors.

In most of the industrial sectors, capacity utilization increased during the month, ie it was higher than in July. It decreased during the month in the production of metal products, excluding machines and devices (from 85.7% in July to 84.9% in August), the production of wood and wood and cork products, excluding furniture; production of products from straw and weaving materials (from 71.9% in July to 71.8% in August) and sewing of clothes (from 69.7% in July to 68.9% in August) sectors.

Better-than-average industry-wide expectations for August. were recorded in the production of rubber and plastic products (the index of expectations reached 64.6, compared to 55.3 in July), the production of computers, electronics and optical products (53.7, in July – 53.3), the production of food products ( 49.6, July – 48.3), clothing (48.1, July – 44.8), furniture manufacturing sectors (47.8, July – 46.2), metal products, except machinery and equipment, manufacturing (47.8, July – 47.9), chemicals and chemical products manufacturing (47.3, July – 46.2).

“It’s still time to listen to what the business says, which makes decisions on the purchase of raw materials and accepts new orders every day. Even if the first half of this year was quite good and industry was one of the engines of the country’s economic growth, today’s situation shows that a better second half should not be expected. Companies say they are experiencing ordering problems in all markets. The German economy, our main export market for products of Lithuanian origin, contracted in the second quarter of this year, and the expectations of its consumers decreased.

Expectations for both its industry and the euro area as a whole fell sharply in August (PMI – Purchasing Managers‘ Index), investments are coming. Even if the purchasing power of consumers is good today due to rising wages, I think other economic growth factors will remind us very soon that sustainable competitiveness is not only about rising wages,” says LPK president Vidmantas Janulevičius.