New records in the manufacturing sentiment indicator


In the third quarter of 2017, a new record has been reached in the manufacturing sentiment indicator. After 19 years, the subjective prospects of the companies have reached 71 points in October, setting up a new record. While international and domestic macro data has been very favourable since the beginning of the summer, business leaders have also caught up with the trend not only in terms of prospects but also in assessing the current situation. This is particularly good in light of the fact that structural change is taking place in the domestic vehicle industry (model change). In counterbalance, an investment boom is taking place primarily in the construction industry and in the related  sectors. The majority is therefore extremely optimistic; there is no major barrier to the expansion of production beyond the general labour shortage, and this also seems to ease the labour market inefficiency. While the problems demanding immediate solutions relating to the labour shortage were likely to be solved by the majority, the structural and chronic deficits should be settled in other ways e.g. structural transformation or capital investment. The picture outlined by the subjective indicators is somewhat tinted by the fact that the confidence index based on objective indicators (53 points) does not justify the 71 points reached on the manufacturing business barometer. Nonetheless, it should not be forgotten that the base value of these indicators is high. This suggests that sectoral production is not expected to increase, hence it can remain on the current level.