Finnish companies' views of the economic situation have brightened since last spring, but remain historically low, the Confederation of Finnish Industries (EK) said on Monday.
The main employers’ lobby published its monthly survey of its 15,300 member firms, which showed a mixed bag of economic indicators.
Business confidence was on the rise in July across all main sectors except retail. However, the EK said that the poll suggested that the economic situation will remain challenging for some time to come.
According to EK director Sami Pakarinen, the economic picture is slowly improving, though. He said that corporate views of the economic outlook were stabilising, indicating that the economy has bottomed out.
Firms may cut payrolls due to low demand
Still, companies reported lower production and sales in recent months. Just over half of responding firms saw weak demand as an obstacle to growth.
However, most companies expect growth in the last quarter of the year.
Of the main industries, only construction is expected to see decreasing production until the end of this year. Pakarinen said he believes that lower interest rates will slowly bring relief to the construction industry as well, though.
Among EU countries, confidence in construction was weakest in Finland in June.
Many companies said they expected to reduce the number of personnel during the rest of the year due to sluggish sales.
Pakarinen said that there may be conflicting signals about the economy in the coming months, which in his view is an economic turnaround.
"Finland is starting to overcome its crisis of confidence and that’s good news, because stronger confidence will get the economy moving," he predicted.
Few consumers see the time as right for big-ticket items
Meanwhile Statistics Finland reported on Monday that the consumer confidence indicator (CCI) remained almost unchanged in July. The index stood at -7.2, compared to -7.6 – but up from the July 2023 reading of -8.8.
The long-term average for the CCI is -2.5. The data is based on a survey of some 1,200 residents of Finland, conducted during the first three weeks of July.
Just over half of respondents said they expect unemployment to rise over the next year.
Juhana Brotherus, chief economist at the Federation of Finnish Enterprises (Suomen Yrittäjät) pointed out that consumer confidence has now risen to its highest level since February 2022, when Russia launched its full-scale war of aggression against Ukraine. Still, it remains modest compared to the era before the war and the rapid rise in interest rates.
"The trend raises hopes in terms of the economy and consumer demand," Brotherus told Yle on Monday.
In July, most respondents said that the time is still very unfavourable for buying durable goods. Only 11 per cent of consumers thought the time was right for making expensive purchases such as homes and vehicles. Seventeen percent of consumers said they expected to take out loans within the next year.
