Finnish businesses are facing a gloomy economic outlook, with 49% of respondents in a recent Chamber of Commerce survey describing their industry sentiment as pessimistic or extremely pessimistic. The survey, conducted by various Chambers of Commerce, highlighted a decline in optimism across different sectors, including revenue, order backlogs, recruitment needs, and exports.
According to the survey, 30% of businesses anticipate a decrease in their revenue over the next six months. In contrast, only 21% had similar predictions in May, indicating a shift towards a more pessimistic outlook. Additionally, 24% of respondents expect their revenue to increase in the next six months, down from 33% in May.
The actual revenue development also fell short of expectations. In May, 44% of respondents believed their revenue for the current year would be better than the previous year. However, in the new survey, only slightly more than 37% held this view.
"Unfortunately, economic news during late summer and early autumn has been predominantly negative, which is reflected in the results of the recent survey. The industry is suffering from weak demand in the international economy, and the construction sector has been significantly impacted by rising interest rates and construction cost increases. Private consumption prospects are currently subdued as well, so rapid growth is not anticipated in the coming months," said Jukka Appelqvist, Chief Economist at the Central Chamber of Commerce.
Job Market Gender Gap Widening
Expectations regarding employment have also slightly declined. Although the situation is still described as moderate, 22% of respondents in the recent survey anticipated a reduction in their workforce. In May, fewer than 12% foresaw job cuts, indicating a significant increase in this pessimistic perspective.
"This clear decline suggests that in the coming months, employment will decrease, and unemployment and layoffs will increase, although a complete collapse is not expected, given the high baseline level of employment. The gender gap in employment, which is larger than usual, might worsen further. There are expectations that employment will decline on sectors dominated by men due to economic conditions. Particularly in the construction sector, a significant decrease in employment is anticipated," explained Appelqvist.
Respondents' perceptions of the current state of their respective industries are also gloomy. Almost half, 49%, described the current industry sentiment as pessimistic or extremely pessimistic, a stark contrast to the 34% reported in May. Only 15% of businesses remained optimistic about the prevailing economic conditions.
In the construction industry, an overwhelming 81% of respondents considered the current sentiment as pessimistic or extremely pessimistic.
Optimism was relatively higher in the service sector. While not outstanding, 21% of respondents in the service industry still viewed the current economic situation optimistically, with nearly 47% considering it normal.
"Unfortunately, in the industrial sector, sentiment has significantly deteriorated. In the October survey, the proportion of respondents from industrial sectors considering the sentiment pessimistic had increased from 34% in May to 55%," noted Appelqvist.
Deteriorating Economic Climate Impacting Profitability
Although cost pressures and issues related to product availability have slightly eased, the deteriorating economic conditions have negatively impacted profitability. In the next six months, 41% of businesses anticipate a decline in profitability.
"This figure is on par with the worst point in December of last year when rising costs and an energy crisis were taking a toll on the economy. Profitability expectations had significantly improved earlier this year as production costs decreased, but now, weakened demand has brought crisis sentiments back," concluded Appelqvist.