Manufacturing holding up, but weak conjuncture

Fonte: ufficio stampa Presidenza della Camera di Commercio di Treviso Belluno|Dolomiti

The risk of recession is receding for the time being. Positive signs on the conjuncture coexist with a still unfavourable year-on-year comparison. The metals industry is recovering, a sign of a possible restart of the demand for inputs supporting the various sectors

Treviso – Belluno, 27 May 2024.

President Mario Pozza’s comment

The results for the first quarter of 2024 of the conjunctural survey conducted as usual on a sample of manufacturing companies in Veneto, Treviso and Belluno areas do not reveal any further deterioration. We are still inside a phase of economic cycle slowdown, but with some encouraging signs of mitigation,’ commented the President of the Chamber of Commerce of Treviso-Belluno, Mario Pozza.

What are the data that allow us to make this statement? The conjunctural variations – explains President Pozza: production and order intake, particularly from foreign markets, have returned to regain ground, sustaining the resilience and the slight improvement in the degree of utilisation of plants, and an equally slight lengthening of the days of production ensured by the order book.

Nevertheless, we are still within a weak economic situation,’ adds the President, ’conditioned by the well-known international scenarios and by sectors that are now paying more for creeping inflation, the drop in household purchasing power, uncertainty in investments, as well as the exhaustion of all too effervescent phases immediately following the pandemic. Of all of them, wood-furniture is a sector that still does not seem to be participating in the economic recovery, with all its indicators (not only production, but also orders) still negative. But even the ‘fashion system’ presents indicators close to stationary, with the exception of eyewear, which confirms its positive trend.

I interpret as a positive sign,’ the president continues, ’also the restart of the metal and plastic rubber industry, after quarters of suffering: sectors that, as suppliers of inputs, are also thermometers of a possible restart of the other supply chains.

The forecasts for the second quarter of the year are marked by cautious optimism. However,’ continues the President, ’we must not underestimate the risks that still remain at the geopolitical level; just as it will be crucial for the ECB to find the right pace for the resetting of interest rates, before depressing too much these weak signs of a restart which, talking to companies, are difficult to project over long time horizons, inhibiting more structured investment strategies.

The international and national scenario

The reading of the conjunctural slowdown as a process of normalisation of the business cycle, rather than a slide into recessionary territory, on which the most authoritative analysts converged, turned out to be correct. The Monetary Fund’s estimates for the year 2024, in its April Outlook, point to an ‘extraordinarily resilient global economy with stable growth’: world GDP will grow by +3.2% this year, as it will in 2023 and as it looks set to do in 2025.

Among the most recent trends is a rise in the price of metals, which could be read – in a phase of disinflation – as a sign of a strengthening of the world industry cycle, of a restart in the demand for goods, after the stagnation that characterised the last year. The IMF forecast for world trade also seems to be heading in this direction: estimated growth of +3.0% after stagnation at +0.3% in 2023.

Significant divergences between countries remain. Global momentum is particularly strong in emerging economies (+4.2% is the estimated GDP growth for 2024, rising to +4.6% China and +6.8% India). The US will continue to grow by +2.7% in 2024 against +2.5% in 2023, although fiscal stimulus to demand is deemed unsustainable in the medium term, with risks – so the IMF – for global financial stability. Corrections will be necessary, limiting US growth to +1.9% in 2025.

In the Eurozone, there will be a recovery, but a very weak one (+0.8% compared to +0.4% last year), paying the price of past energy costs, of a still creeping inflation and of a restrictive monetary policy that must now be properly recalibrated to avoid an excessive slowdown in growth; which could then have repercussions on the labour market, which has so far been sustained by the strategies of ‘hoarding’ staff by companies in support of the changes in the production paradigm (digitalisation, sustainability).

At the individual country level, apart from the case of Spain (+1.9%), growth estimates remain in the ‘zero point’ range, where, if anything, the news lies in Germany’s change of sign, again with reference to the IMF GDP forecasts, which will go from -0.3% in 2023 to +0.2% for this year. Italy will continue to float around a ‘growth’ of +0.7%, compared to +0.9% last year.

(…) Read the full text in italian 

Translated by Cecilia Flaccavento
Intern at the Chamber of Commerce of Treviso – Belluno|Dolomites