Demand in Finland’s largest export industry has remained weak – the economic upturn might be more muted than expected
Demand has remained weak in Finland’s largest export industry. The number of tender requests received by companies in the technology industry remained low, and no improvement has been seen in overall demand. Hopes for a turnaround in the economic cycle have been pushed back, according to the latest order book and personnel survey by Technology Industries of Finland.
Industrial companies in Europe and Finland have continued to face an extremely difficult situation. In the Finnish technology industry, turnover in January-April was down 8 per cent on the corresponding period of 2023.
New order intake in Europe and the latest data on the trend in demand and the order intakes of companies in the Finnish technology industry indicate that there are as yet no clear signs of the anticipated turn for the better.
“There has been no further significant weakening. We can thus take the optimistic view that the business cycle is now at its lowest ebb and that it will already pick up slowly in the winter. However, there are indications that the road to recovery may be rockier than we hoped in the spring,” says Petteri Rautaporras, Director, Chief Economist.
Finnish industry and technology industry have had a difficult year behind them. According to the latest order book and personnel survey by Technology Industries of Finland, the value of new orders in April-June was down one per cent on the previous quarter and 15 per cent year-on-year. At the end of June, the total value of order books was 3 per cent lower than at the end of March and 12 per cent lower than in the corresponding period of the previous year. The value of order books in the technology industry has now declined for five consecutive quarters.
The balance figure for tender requests was -15 in June, and total demand has remained weak. However, in April-June, the differences between companies in the industry were quite big. Some companies have seen at least a momentary recovery in order intake, while the intake of other companies remained very low. Despite the very difficult situation, companies have remained confident that the situation will gradually ease up.
“The first interest rate cut has been made and we are waiting for the next. However, due to the sluggish turnaround in the economy, companies would we well advised to prepare themselves to face quite a long period of weak demand,” says Rautaporras.
In mechanical engineering, which is the largest technology industry sector, the value of new orders decreased by 7 per cent in the April-June period from the previous quarter. Year-on-year, the value of new orders fell by as much as 26 per cent.
Finland’s appeal is the key factor
Industry has had a tough year, as is evident from a downswing in the number of personnel employed by technology companies, although no dramatic turn for the worse has as yet occurred.
At the end of June, the industry had 335,000 employees in Finland. Compared to the end of March, the number of employees was down by about 1,000. According to the personnel survey, the number of employees affected by lay-off procedures at the end of June was approximately 13,000.
New recruitments during the spring and early summer were moderate, with a total of 9,500 hires. The number of summer jobs at technology companies has been quite normal in spite of the difficult economic situation. Based on the personnel survey, around 18,000 people worked in summer jobs in the technology industry.
“The employment situation has weakened and, despite the government’s growth measures, the public sector continues to incur even more debt. It is reassuring that proposed investments in Finland amount to over EUR 250 billion. We all need to work hard to ensure that most of these projects will be carried out,” says CEO Jaakko Hirvola.
Preparations for the implementation of tax incentives for large industrial investments and investment authorisation processes must be handled swiftly. “We will attract new industrial investments to our country from both Finnish and foreign parties by ensuring the availability of clean and affordable energy and by investing in high technological expertise. In this area, we already have a good track record to show to global companies. We have a vital need for top and professional talent. We must both train these experts ourselves and attract them from abroad by ensuring that Finland is appealing to them,” Hirvola says.
Further information:
Rautaporras Petteri
Director, Chief Economist Technology Industries of Finland