Lithuanian- Economy.net

Comment on industrial sentiments

I am sailing stormy waters…

Today Nerijus Maciulis (@NerijusMaciulis) twittered: „Pramonės pasitikėjimo rodiklis -

žemiausiame lygyje nuo 2009 metų. Reakcija į politinę aplinką? Kitų veiksnių įžvelgti sunku“

(trans: Today the industrial confidence indicator is at the lowest level since 2009. Is this

reaction to political situation? It’s hard to find any other explanation).

Well some time ago, I’ve already forecasted, that Lithuanian sentiment indicators will

sooner or later decrease due to exposure to worsening European macro-economic situation.

So how bad is the situation really? How important is the outcome of Selma’s election?

First of all: Statistics Lithuania provides not seasonally adjusted data. This makes the

differentiation difficult. If regarding not seasonally adjusted data, than Maciulis is wright,

November 2012 is with the “-21” the worst result since 2009M12 with -32.3. Yet this is not

quite the right way to compare such statistics. One should look at the seasonally adjusted

data, as there are many fluctuations caused by season.

If comparing these two graphs, one would recognise, that situation is not as dramatic as

Maciulis described: November 2012 (-16.4) was not the worst since 2009; August 2012 (-

16.6), September 2011 (-16.7) and June/July 2010 (-18.1/-17.4)…

So can the reason be the political outlook? Sure it can, as it is not sure how much will the

upcoming government increase the minimum wage, or what other changes will occur.

Why do I think so?

Lithuanian- Economy.net

Comment on industrial sentiments

Because the situation in industry is worsening since at least 3 months, far before the

outcome of Seima’s election was existent. The assessment of order-book and export-book

levels was falling since September; the assessment for production expectations has equally

changed the direction. One of the causes is the production trend in recent months, which

was decreasing since July. In my opinion, declaration that industrial sentiment is biased by

the outcome of elections is short-sighted.

Fact supporting my thesis is, that neither service confidence indicator, nor construction

confidence indicator or the retail confidence indicators (branches employing many low paid

Production

trend observed

in recent

months

Employment

expectations

for the months

ahead

Assessment of

order-book

levels

Assessment of

export order-

book levels

Assessment of

stocks of

finished

products

Production

expectations

for the months

ahead

Selling price

expectations

for the months

ahead

Industrial

confidence

indicator

2011M11 -2.6 -0.7 -39.7 -41.1 7.1 4.9 -3.3 -14.0

2011M12 1.9 -7.9 -31.9 -41.9 0.7 9.7 -4.7 -7.6

2012M01 8.5 -2.2 -33.3 -37.1 3.9 1.8 0.0 -11.8

2012M02 2.9 -6.9 -30.9 -34.2 3.6 4.9 0.9 -9.9

2012M03 11.7 -0.4 -37.2 -43.5 5.1 0.8 0.0 -13.8

2012M04 12.4 0.8 -37.8 -44.0 8.1 7.1 10.7 -12.9

2012M05 5.3 1.4 -33.4 -39.6 5.6 7.0 9.6 -10.7

2012M06 7.2 -2.3 -38.1 -44.5 9.9 14.7 1.3 -11.1

2012M07 9.5 -1.5 -36.9 -41.8 2.8 7.1 -1.4 -10.9

2012M08 8.7 -0.6 -45.1 -49.1 9.6 4.9 -3.2 -16.6

2012M09 3.2 -2.0 -41.2 -46.3 4.6 9.1 2.6 -12.2

2012M10 -0.3 0.9 -43.4 -43.6 6.6 8.7 3.0 -13.8

2012M11 -2.5 -2.3 -45.3 -46.7 6.4 2.4 4.4 -16.4

Lithuanian- Economy.net

Comment on industrial sentiments

workers) don’t seem to be affected by the outcome of elections. At least up to now, I cannot

recognise any significant change in November

What we actually observe is a clear lagging behind our neighbours:

Lithuania had relatively similar development in industrial sentiment indicator as Estonia. The

levels persisted since in the last 2 years with some fluctuations. But at least since August

2012 Estonian and Lithuanian have started to adjust to the global development. An

example would be two of our export markets: Poland and Germany. In Poland the

readjustment hast started somewhere in the mid-2011 and Germany’s … well see yourself.

I’m not the once shouting that the “crisis” is upcoming, but if one reads the news: “53

percent of 862 investors, analysts and traders who are Bloomberg subscribers said this

week they think Germany’s economy will drop into a recession for the first time in more

than three years” (Bloomberg.com), one should recognize, that there are far more effects,

than the local elections! I am sailing stormy waters…..