Orders slow in factories, industry ends up in the red

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The last minus sign on an annual basis occurred at the end of 2020, in the exit trajectory from Covid.

It is now recurring in Lombardy in the third quarter, within a framework of overall weakness in manufacturing, regionally and beyond. Lombardy has slowed down (-0.7% cyclical, -1.5% annual), worrying because it is pervasive and collective, visible on multiple variables, in numerous sectors, in multiple geographical areas. In the production trend, first of all, where the growth rates for 2022, which started on a trend basis from +10.7% in the January-March period to the more modest +2.7% at the end of the year, continue on the downward path, finally presenting the first time since the end of 2020 a negative figure. Turnover is stuck at zero, after having experienced a 2022 “drugged” by energy with double-digit growth in price lists while orders end in negative territory, an even more worrying element because it harbingers of less than brilliant news also for 2024: the orders domestic ones are reduced by 3.5%, foreign ones by four decimals.

Change of scenario clearly visible in the distribution of frequencies in terms of production: if a year ago just over a quarter of companies reported a strong contraction in volumes, now we have risen to 39%; if in the past increases above 5% involved almost half of the sample, we have now fallen to a third.

In the analysis by Unioncamere Lombardia, the one affected is evidently the rate of use of the plants, falling to 72.7%, with more than one sector, including chemicals and textiles, being below the threshold of 70% considered “dangerous”.

The result of the slimming down of the order book is in the days of guaranteed production, which after having reached a peak of over 90 days now fall to 81. Among companies, the feeling of a not entirely temporary contraction in demand is also strengthened, a hypothesis visible in the worsening of expectations: the balance between optimists and pessimists is unbalanced in favor of the latter due to expectations of output, turnover, foreign and above all domestic demand. The only sign of “resistance” is in the employment data, always the last variable to move during inversions of the economic cycle: here the audience of those expecting stability is particularly widespread and reaches almost 80% of the sample.

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