Manufacturing new orders fell by 9.9% y/y in November after falling by 10.6% y/y in the month before, according to data published by the stat office on Thursday. Orders for capital goods continued to decline strongly, suggesting that investment activity failed to register significant improvement amid the uncertain external environment. At the same time, the increase of consumer goods strengthened after weakening in October. Orders for intermediate goods turned back to growth, after falling in the month before. Industrial sales increased by 8.6% y/y, which is in line with the strengthening of the industrial output growth. Still, the increase of the sales remained below that of the production, meaning that companies disposed of inventories accumulated in the previous months.
Judging by the data, it seems that industrial output growth will decelerate in the coming months, which will likely result in weakening of the GDP growth in Q1 2017 as private consumption is projected to decelerate its increase. Still, we do not expect the slowing down to be significant as the strengthening of the economic activity in Finland will inevitably have positive effect on Estonia. In regards to Q4, we do not believe that the deceleration of the industrial output growth in December was big enough to prevent the increase of the sector’s positive contribution to the GDP growth.