Continued optimism in manufacturing

The business tendency survey for the second quarter of 2019 shows continued growth in total industrial production, but growth is somewhat weaker compared to the first quarter of 2019. The growth is particularly strong among producers of consumer goods and capital goods who report increased production. Producers of intermediate goods report moderate activity growth in the second quarter.

The industrial leaders also report increasing growth in employment in the second quarter of 2019. The increase in employment is particularly strong for capital goods. There is reason to believe that this is related to the growth in oil investments. Producers of intermediate goods and consumer goods also report employment growth.

Continued growth for new orders

Total stocks of orders have increased for seven consecutive quarters and it is particularly producers of consumer goods and capital goods that report growth in the second quarter. Increased new orders from the domestic market is the main reason for the growth in the volume of new orders, but the export market also reports an increase in the total level of new orders in the second quarter of the year.

Overall, there is continued growth in new orders for the export market, but this is somewhat lower than in the domestic market. For the export market, strong growth is reported for producers of capital goods, while a fall is reported for the new orders for intermediate goods.

For more than two years now, growth has been reported in price levels in the home and export markets for manufacturing as a whole. It should be noted that the growth rate in export market prices is now more moderate than in the previous quarter. Producers of consumer goods reported the highest growth rate for prices in both markets.

Growth is expected in the third quarter

The general outlook for the third quarter of 2019 is clearly positive for manufacturing as a whole, but the numbers of leaders with an optimistic view of the coming quarter is somewhat lower than in the previous survey. The indicator for future investments also supports this optimism since continued growth is reported for approved investment plans.

The positive picture is supported by expectations of solid growth in new orders and total stocks of orders for the third quarter. On the other hand, the growth rate in export market prices is expected to decrease somewhat in the third quarter.

The industrial confidence indicator for the first quarter of 2019 was 5.6 (seasonally-adjusted net figures). This is somewhat lower than the result from the previous quarter, but still indicates growth in the production volume. A decrease in producers of capital goods was the main cause of the fall of the industrial confidence indicator. On the other hand, the indicator showed a pronounced increase for producers of intermediate goods. Values above zero indicate that total output will grow in the forthcoming quarter, while values below zero indicate that total output will fall. International comparisons of the industrial confidence indicator are available from Eurostat (EU), The Swedish National Institute of Economic Research and Statistics Denmark.

Lack of qualified labour still limiting production

The share of managers reporting that weak demand and strong competition were limiting factors for production was reduced in the first quarter of 2019. At the same time, there is an increase in the numbers of leaders who report that a lack of qualified labour is a challenge to increasing production further.

Figure 6 below shows how the indicators that represent resource shortage have increased since the lowest level in 2016, while demand and competition represent a minor challenge to manufacturing.

The average capacity utilisation for Norwegian manufacturing shows no change from the last quarter, and was calculated to 79.4 per cent at the end of the second quarter of 2019. This is below the historical average of 80.2 per cent. International comparisons of average capacity utilisation are available from Eurostat (EU).

Timelines

The survey data was collected in the period from 6 June to 19 July 2019.