Piedmontese business confidence is declining for the fourth quarter of 2023. although for now we cannot speak of a real recessionary turning point. This is confirmed by the stability of employment and investments (although not particularly brilliant), or the stability of the financial indicators (delays in collections and payment times), the high rate of use of the systems (close to 80% even in industry), the modest use of redundancy payments at an overall level (it rises by a few points but still remains at low levels). On the contrary, the marked acceleration in prices (raw materials, energy and transport) should be noted on the negative side. These are the main results of the surveyTurin Industrial Union-Confindustria Piedmont.
At a sectoral level, the gap between manufacturing e services. In industry, the balances for production and orders worsened by a few points, settling just below the equilibrium value between forecasts of increase and reduction. In particular, metalworking (especially metal products, mechatronics and metallurgy), textiles, chemicals, rubber, plastic and various manufacturing (jewelry, toys, etc.) are slowing down. Food (thanks to expectations for Christmas), construction, wood and automotive remain in growth. In the tertiary sector, however, expectations remain largely positive in all sectors, albeit with greater caution compared to June, with the exception of trade and tourism which recorded a negative balance between optimists and pessimists.
Turin better than the regional average
The expectations of Turin companies for the fourth quarter of 2023 are more favorable than those of the entire Piedmontese sample: in fact, there is no cooling of the climate of confidence observed at regional level and in manufacturing the indicators record an improvement compared to the last quarter, contrary to what was observed at the regional.
Il balance between optimists and pessimists on production it is higher by more than 10 points overall and by more than 5 points if we consider regional manufacturing alone. The same goes for the order forecasts, negative for Piedmont and positive for Turin.
The use of CIG remains low, approaching an all-time low; improves the resource utilization rate by one point (close to full utilization). The propensity to invest is stable: a quarter of companies have investment programs of a certain size. About a third of companies have orders guaranteed for more than 6 months. Profitability was positive, especially in the tertiary sector. The new increase in costs for raw materials, energy and logistics is worrying. The more favorable Turin data is explained by the greater weight of sectors with more positive expectations, such as the automotive sector.
The data
For the fourth quarter of 2023, 24,1% of companies expect an increase in production, against the 10,7% who expect a decrease: the balance, equal to +13,4%, improves by 0,6 percentage points compared to the March survey and is over 11 points higher than the balance for Piedmont as a whole . Similar trend for orders, with a balance of 10,4% stable compared to the last survey. The only negative data is that of exports, down more than 5 points compared to June. Good performance for the investments: there are over 25% of companies with spending programs of a certain commitment, a share similar to the Piedmontese average. The use of redundancy payments varies little, affecting 5,7% of companies, up by 1,5 percentage points compared to June. The rate of use of plants and resources improved (83%), returning to long-term average values.
In the province of Turin, however, the traditional gap between medium-large companies (over 50 employees) and smaller companies (under 50 employees) appears to be closing, with production expectations of +17,6% and +11,6 respectively, XNUMX%, for the next quarter.
Q2023 XNUMX Outlook Comments
“In all advanced countries and in Italy there is a more or less significant deterioration in confidence; and better maintenance of services compared to manufacturing. The situation has undoubtedly become more difficult, with inflation remaining high, market prospects more uncertain and monetary policy still restrictive. However, Turin's businesses are showing good resilience, with expectations higher than the regional average (...) Despite the concerns linked to an international context which has further worsened in recent days with the dramatic events in Israel", he declared Giorgio Marsiaj, president of the Turin Industrial Union.
“But Piedmontese entrepreneurs are resilient – he added Marco Gay, president of Confindustria Piemonte – and the investments that continue confirm this. The cost of energy and inflation, which is not falling despite the rise in rates, leave the Government little room for maneuver on the public budget on the issues that are most important to entrepreneurs, starting with the tax wedge. But interventions to support innovation and the twin transition, together with the Pnrr, can lead to overcoming this situation, which comes after 12 quarters of growth".
Detail: the main results of the Piedmontese survey
For the fourth quarter of 2023, the production expectations of the almost 1.200 Piedmontese companies record a slowdown, in line with the trend that already began in the third quarter: 19% of companies expect an increase in activity levels, against 16,7% which is expected to decrease. The optimists-pessimists balance is equal to +2,3% (it was +7,8% in June).
16,9% of the respondents foresee a increase in employment, against the 5,7% who expect a reduction, and an optimist-pessimist balance of +11,2% (it was 13,7% in the last survey). Expectations for orders slow down, with a balance of -0,4%, down 4 percentage points compared to June.
Expectations on the export, with an optimist-pessimist balance of -7,3%, probably due to the continuation of uncertainty and the slowdown of the global economy. The level of performance drops slightly but remains good investments, which today affects 25% of respondents (it was 27,0% in June). Increases the use of layoffs, which now affects 8,5% of businesses. The rate of use of plants and resources is stable, returning to the long-term average values (80%). The gap remains wide between medium-large companies (over 50 employees), more optimistic about production levels (balance +8%) and the smaller ones (under 50 employees), which record a negative balance again, after many quarters of growth (-0,1%).
Worry the new surge in prices, compared to previous months: the balance between those who expect an increase and those who expect a decrease in costs is equal to +30,8% for raw material prices (it was 14,3% in June), +43,7% for energy (it was 5,6%) and +38,0% for logistics and transport (it was 20,4%).
At a territorial level, an improvement above the regional average is observed for Torino, Asti, Alexandria, Cuneo e Canavese, with balances on production forecasts of +13,4%, +5,7%, +5,3%, +4,9% and +3,6% respectively. On the other hand, the optimistic-pessimistic balances are negative Vercelli, Verbania, Biella e Novara, with balances of -21,7%, -11,4%, -6,5% and -4,7% respectively.
In manufacturing, there is a further cooling of expectations, compared to June, with balances going from +2,2% to -1,3% for production. The balance on orders is still negative, going from -1,4% to -5,6%.
On the other hand, expectations for employment are positive, with the balance equal to +8,7%, from +10,6% in June. It gets even worse export balance, which goes from -2,7% to -9,2%.
They keep them investments, which affect 25,6% of companies, a slight adjustment compared to 28,3% in June. The rate of use of resources is stable (77%), while the use of CIG is rising again, which today concerns 11,6% of companies.
At a sector level, expectations for the sector remain positive feed (+25,3% the optimists - pessimists balance), ofconstruction and plant engineers (+10%) of paper-graphic (+10,7%) and del Wood (+11,8%). The expectations of engineering recorded a marked slowdown, with the balance between optimists and pessimists going from +3,6% in June to -6,4%. Metal products mainly fell (balance -12,2%), metallurgy (-18,2%), electronics (-4,3%) And machinery (-3,5%): the trend of theautomotive (+9,5%). Among the other manufacturing sectors, the decline textile (-13,0%), the manufactories miscellaneous (-6,3%) and the chemistry (-4,2%).
In services, the climate of confidence remains steadily positive compared to June. The balance relating to activity levels is equal to 11,2% (it was 21,4% in the last survey), that relating to orders is equal to +12,1% (from +18,4%), that on employment is +17,2% (was 21,2%). The investments remain stable (24,3%), the use of redundancy payments has been eliminated (0,6%). The resource use rate is high (87%).
At a sector level, the expectations of companies in the tertiary are positive in all sectors, with balances of +7,1% for transport, +10,6% for business services, +15,6% for ICT, +22,1% for other services , +13,0% for utilities. The only exception is trade and tourism, which recorded a negative balance (-7,7%).
Focus on the wood sector
In the September survey, an in-depth study was conducted on Wood sector which, in addition to traditional processing, also includes the production of panels, packaging, floors, semi-finished products for furniture, cork, building products and trade in wooden products.
According to 2022 data from FederlegnoArredo Study Center, the Piedmontese sector has a total of 3.255 companies (of which 2.127 wood, 1.128 furniture) with 11.396 employees (7.736 wood, 3.660 furniture) and produces a turnover of 1.445 million euros (1.123 wood, 322 furniture).
In Italy the sector is made up of over 68 thousand companies, employs just under 300 thousand people and produces a turnover of 56.545 million euros. The last three years have been complex: Covid, tensions on the commodity, energy and transport markets, war, have negatively influenced the performance of the reference market, strongly linked to the imports of raw materials and the exports of finished products. During 2022, there was a decrease of almost 2.000 companies (-2,9%), compared to an increase of over 4.000 employees (+1,5). The turnover trend is positive, growing by 12,6% compared to 2021.
The situation remains uncertain also for 2023. According to a survey by the FederlegnoArredo Study Center in the first half of 2023, compared to the same period of 2022, the supply chain recorded an overall contraction of 5,9% with a negative trend for both the Italian market (- 6,8%) than for exports (-4,5%). The one that weighs most heavily on the overall trend is the wood macrosystem, which fell by 12,6%, (-14% sales on the national market and -8,3% exports). The furniture macrosystem - which represents 62% of total sales - holds up better and records -1,1%. The slowdown in the sector, inflation and high rates cause a reduction in investments for 39% of companies. 85% of them say they are experiencing an increase in costs. The research predicts a negative end of the year for the supply chain as a whole (-3,3%): slightly positive for furniture (+0,2%) and more negative for the wood macrosystem (-8,5%) .
Matteo Mazzoni, president of the Turin Industrial Union of Wood Association:
“The situation in the wood sector this year is still uncertain and still offers signs of contraction – he said Matthew Mazzoni, president of the Turin Industrial Union Wood Association –. But my perception is of a scenario that is starting to show some signs of recovery for the sector, which should consolidate in the next year. For a few months now I have been recording a revival of the markets in Germany and France that we haven't seen for a long time and which could provide the energy needed to get us going again. Our system is normally linked to export dynamics and there are significant thermometers, such as the production volumes of pallets".
