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In July 2024, business leaders in the manufacturing sector estimated that demand in the past three months was less brisk than in the previous quarter. They also expect demand, especially from abroad, to slow in the next three months. In addition, they estimate that production bottlenecks increased during the quarter, reaching a level not observed since April 2023. Finally, business leaders expect wage growth in the sector to slow.
Demand for industrial products was noticeably less brisk this quarter
The balance of opinion on past changes in global and foreign demand has fallen sharply in July 2024. The balance related to global demand has deviated from its long-term average, while the balance related to foreign demand has fallen back below its own level. The balance of opinion on the expected changes in global and foreign demand has also fallen back. Nevertheless, both remain above average.
July 2024, production bottlenecks increase dramatically
In July 2024, the share of companies that have reached the limit of their production capacity increased significantly: 38% of companies believe that they will not be able to increase production with existing means if they receive more orders, compared to 29% in the previous quarter. This share has changed significantly compared to the average and has reached its highest level since April 2023. At the same time, taking into account the expected changes in orders in the coming months, slightly fewer company leaders believe that production capacity is sufficient compared to three months ago. The balance of opinions has fallen back and deviated from the average. The utilization rate of production capacity has increased slightly: at 81%, it is still below the average.
The balance of opinion on expected changes in investment over the next three months has fallen sharply and has fallen back to January’s level, which is well below the average (calculated since this question was introduced in the survey in October 2021).
GraphicsThe Industrialist’s View: Demand and Factors of Production
Balance of opinion, expressed as % SA
| manufacturing | Average* | October 23 | January 24 | April 24 | July 24 |
|---|---|---|---|---|---|
| Total demand | |||||
| Past changes | 1 | -1 | -5 | -1 | -9 |
| Expected changes | 2 | 2 | -6 | 4 | 3 |
| Foreign demand | |||||
| Past changes | 2 | 6 | 2 | 7 | -5 |
| Expected changes | 4 | 6 | -9 | 12 | 7 |
| Production Factors | |||||
| Production bottleneck (%) | twenty four | thirty | Thirty-two | Twenty-nine | thirty eight |
| Production capacity assessment | Thirteen | 9 | 2 | 7 | 5 |
| Capacity utilization(%) | 83 | 81 | 81 | 80 | 81 |
| Expected investment changes** | 18 | twenty one | 7 | 18 | 7 |
- *: Long-term averages since 1976, except for the question on expected changes in investment (from 2021).
- **: Data are not seasonally adjusted as the series is only collected from 2021 onwards.
- The results of the latest survey are preliminary.
- Source: INSEE – Quarterly Business Survey by Industry
The difficulty of recruiting workers continues to decline and is at the lowest level since July 2021
The percentage of business leaders who said they were having difficulty hiring fell from 52% to 48% between April and July 2024. This percentage has been falling since October 2022, but remains well above the long-term average, but has reached its lowest level since July 2021.
Prevailing wage expectations fall again
In July 2024, business leaders reported that their sales prices had decreased by an average of 0.1% over the previous three months, a steady change since the January 2024 report. Over the next three months, business leaders expect their sales prices to increase (0.2%).
The balance of the overall outlook for changes in hourly wages in the manufacturing sector has again declined significantly and continued to diverge from the long-term average, reaching its lowest point since July 2021.
The cash flow situation of industrial companies is perceived to have deteriorated more than in April: the relevant balance of opinion decreased again and deviated from the average level (calculated since this question was introduced in the survey in October 2021).
GraphicsIndustrialist’s view: employment, sales prices and cash flow
Balance of opinion, expressed as % SA
| manufacturing | Average* | October 23 | January 24 | April 24 | July 24 |
|---|---|---|---|---|---|
| Staff size | |||||
| Difficulty in recruiting (%) | Thirty-two | 57 | 53 | 52 | Forty eight |
| Overall salary expectations | -38 | -42 | -39 | -47 | -55 |
| Sales Price** and Cash Flow | |||||
| Past sales price change (%) | 0.2 | 0.3 | -0.1 | -0.1 | -0.1 |
| Estimated sales price change (%) | 0.2 | -0.3 | -0.3 | 0.3 | 0.2 |
| Cash flow issues*** | -7 | -8 | -7 | -8 | -11 |
- *: Long-term average since 1991, excluding cash flow issues (from 2021).
- **: For changes in sales prices, the Business Survey asks a quantitative question quarterly in addition to the qualitative question asked monthly.
- ***: Data are not seasonally adjusted as the series is only collected from 2021 onwards.
- The results of the latest survey are preliminary.
- Data source: INSEE-Quarterly Business Survey of Industry
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