Manufacturing performed weakly in the first two months this year, especially when compared to the same period a year before, an industry survey by the Federation of Industry has shown.

Overall order books were reported at significantly “below normal” levels, with order books in February falling to one of their lowest levels ever registered since the survey started being conducted.

No change was reported between January and February in the balance of respondents expecting production to increase in the following three months, the survey showed.

However, this balance was noticeably weaker than that registered both in December 2006 and, even more so, in the same period last year.

Stocks of finished products remained relatively close to the average levels reported for the last six months. At the same time, the number of firms expecting a fall in selling prices declined in February when compared to the previous month.

With respect to employment expectations, February 2007 saw the highest balance of respondents since March last year, intending to reduce employment over the coming three months.

Industrial confidence for manufacturing remained in negative territory, with this indicator worsening in February compared to the previous two months. Industrial confidence for the first two months of 2007 contrasts significantly with that registered in the same period last year when industrial confidence was in positive territory.

The investment goods sector

The investment goods sector had registered a negative industrial confidence in December 2006 for the first time since April that year. This indicator has now worsened further in February, attributed mainly to “below normal” order book levels which constantly deteriorated since November last year.

Production expectations remained unchanged in positive territory for January and February, standing at significantly stronger levels than those registered in the last quarter of last year. Stocks of finished products for the sector reached their 11-month high in February.

The number of firms in February expecting selling prices to fall increased compared to the previous month, but their number was markedly lower than in December.

At the same time, outlook for employment in the sector turned negative in February as opposed to the positive outlook registered a month before.

The consumer goods sector

Manufacturers of consumer goods reported a positive industrial confidence in February for the first time since July last year. This improvement reflects stronger production expectations for the sector as the number of respondents expecting production to increase in the coming three months shot up drastically when compared to the previous month. The February survey, however, does not suggest any revival in demand. Indeed, overall order book levels in the respective month declined for the sector, thus maintaining a declining trend reported since November last year. At the same time, stocks of finished products remained relatively unchanged.

With respect to selling-price expectations, February saw a strong balance of firms expecting selling prices to rise over the coming three months, strongly exceeding January’s balance. Employment expectations for the coming three months consolidated further in positive territory, to register the strongest balance in February over a period of four months.

The intermediate goods sector

Industrial confidence for intermediate producing firms deteriorated significantly in February, thus resulting in the worst sectoral performance in manufacturing. This situation reflects a deterioration in total and export order books compared to the previous month, although balances were still less negative than those reported in November and December last year. Correspondingly, stocks of finished products remained high.

The three-month outlook for production in February was not good at all, with a large balance of respondents expecting production to scale back. The survey also shows a negative outlook for selling prices, although the balance of firms expecting to lower selling prices in the coming three months declined gradually since November last year.

During the same month, the majority of intermediate producing firms reported that they intended to reduce employment over the following three months, in contrast with what happened in the previous month when employment expectations were positive.

Industry surveys are carried out during the first three weeks of each month. There were 187 respondents, employing 12,071 persons, for the January 2007 survey; and 191 respondents, employing 13,370 persons, for the February 2007 survey.