Expected activity increase in manufacturing

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Norwegian industrial managers report a production level increase as well as growth in the total stocks of orders in the fourth quarter of 2018. The general expectations for the first quarter of 2019 are also positive among most of the industry leaders, and further growth is expected in the activity level as well as in employment.

The business tendency survey for the fourth quarter of 2018 2018 shows an increase in total production compared with the third quarter of 2018. The growth is particularly strong among producers of intermediate goods, but also producers of capital goods and consumer goods report a production increase in the fourth quarter for 2018. 

The overall employment in manufacturing went up in the fourth quarter of 2018. It is particularly producers of capital goods that report employment growth. Higher workloads and large projects among petroleum-related producers is the main reason for the increment in employment for manufacturers of capital goods.

Figure 1. Production and employment for manufacturing. Changes from previous quarter. Smoothed seasonally adjusted

Turning point value Total volume of production Average employment
Q1-2009 50 37.62 36.18
Q2-2009 50 39.78 36.65
Q3-2009 50 44.58 39.40
Q4-2009 50 47.89 42.41
Q1-2010 50 50.02 44.54
Q2-2010 50 51.33 45.43
Q3-2010 50 52.03 46.99
Q4-2010 50 53.23 50.45
Q1-2011 50 55.35 53.88
Q2-2011 50 55.91 54.72
Q3-2011 50 55.06 54.23
Q4-2011 50 54.22 53.62
Q1-2012 50 53.24 53.64
Q2-2012 50 52.47 54.08
Q3-2012 50 52.01 54.27
Q4-2012 50 51.02 53.14
Q1-2013 50 49.77 52.28
Q2-2013 50 50.83 52.39
Q3-2013 50 52.61 51.58
Q4-2013 50 54.01 50.57
Q1-2014 50 54.54 49.96
Q2-2014 50 52.99 49.70
Q3-2014 50 51.17 49.86
Q4-2014 50 50.48 49.00
Q1-2015 50 48.30 45.18
Q2-2015 50 46.24 41.07
Q3-2015 50 46.54 39.01
Q4-2015 50 47.61 39.36
Q1-2016 50 48.88 41.18
Q2-2016 50 49.09 42.26
Q3-2016 50 47.26 41.99
Q4-2016 50 46.71 42.73
Q1-2017 50 47.99 45.05
Q2-2017 50 49.10 47.49
Q3-2017 50 50.32 49.51
Q4-2017 50 51.31 50.36
Q1-2018 50 52.54 50.52
Q2-2018 50 54.63 51.36
Q3-2018 50 55.74 52.61
Q4-2018 50 55.07 52.79

The total stocks of orders went up

New orders from both the domestic and export market show an increase in the fourth quarter of 2018, but the growth rate seems to be somewhat lower than what was reported in the previous quarter. At the same time, industry leaders report that the total stocks of orders has increased, and it is particularly producers of intermediate goods that contribute to this growth. 

Producers of capital goods report an increase in the total level of new orders, but the growth rate in new orders from the domestic market has fallen compared to the third quarter of 2018. For consumer goods, there was an increase in new orders from the domestic market, while new orders from the export market were more or less unchanged.

Figure 2. New orders received for manufacturing. Changes from previous quarter. Smoothed seasonally adjusted

Turning point value New orders received from home markets New orders received from export markets
Q1-2009 50 32.46 28.00
Q2-2009 50 37.37 38.02
Q3-2009 50 42.34 41.09
Q4-2009 50 44.47 43.87
Q1-2010 50 46.92 47.57
Q2-2010 50 50.79 51.75
Q3-2010 50 53.52 53.41
Q4-2010 50 55.36 54.20
Q1-2011 50 57.31 53.28
Q2-2011 50 56.93 50.38
Q3-2011 50 54.89 48.05
Q4-2011 50 54.95 47.23
Q1-2012 50 55.00 48.04
Q2-2012 50 52.48 48.87
Q3-2012 50 49.86 46.58
Q4-2012 50 49.22 44.64
Q1-2013 50 48.28 45.04
Q2-2013 50 48.85 47.96
Q3-2013 50 50.59 52.38
Q4-2013 50 50.79 54.92
Q1-2014 50 50.12 54.83
Q2-2014 50 49.88 53.06
Q3-2014 50 48.17 49.60
Q4-2014 50 46.28 46.11
Q1-2015 50 44.40 43.51
Q2-2015 50 43.10 42.20
Q3-2015 50 43.10 43.37
Q4-2015 50 44.39 44.11
Q1-2016 50 45.94 43.21
Q2-2016 50 46.85 42.54
Q3-2016 50 47.23 43.67
Q4-2016 50 49.19 45.81
Q1-2017 50 50.29 47.86
Q2-2017 50 49.94 49.44
Q3-2017 50 51.38 50.41
Q4-2017 50 53.35 51.86
Q1-2018 50 54.38 54.18
Q2-2018 50 54.89 55.58
Q3-2018 50 54.61 55.12
Q4-2018 50 52.98 54.47

For the seventh consecutive quarter, a price increase has been reported both in the home and the export market. Hence the positive trend continues in the fourth quarter of 2018, with price growth in both markets for overall manufacturing. At the same time, industry leaders report a lower growth rate for export prices compared with the previous quarter. Producers of capital goods reported a higher growth rate for prices in the domestic market. This indicates that improved market conditions and increased capacity utilisation among petroleum-related producers are pushing up prices when new contracts are about to be signed.

Figure 3. Prices on products for manufacturing. Changes from previous quarter. Smoothed seasonally adjusted

Turning point value Prices on products at home markets Prices on products at export markets
Q1-2009 50 44.77 45.16
Q2-2009 50 44.35 43.94
Q3-2009 50 46.02 44.06
Q4-2009 50 46.22 43.85
Q1-2010 50 46.72 45.52
Q2-2010 50 49.06 49.27
Q3-2010 50 51.36 51.55
Q4-2010 50 53.53 52.68
Q1-2011 50 55.80 52.84
Q2-2011 50 54.83 49.97
Q3-2011 50 52.60 46.55
Q4-2011 50 51.99 44.99
Q1-2012 50 51.88 45.55
Q2-2012 50 51.44 46.21
Q3-2012 50 51.89 45.44
Q4-2012 50 51.78 44.44
Q1-2013 50 51.10 45.04
Q2-2013 50 52.18 47.16
Q3-2013 50 53.12 50.00
Q4-2013 50 53.63 53.07
Q1-2014 50 54.39 53.30
Q2-2014 50 54.18 51.53
Q3-2014 50 53.39 50.79
Q4-2014 50 53.12 51.67
Q1-2015 50 51.09 50.60
Q2-2015 50 48.65 49.45
Q3-2015 50 48.19 49.79
Q4-2015 50 48.77 49.06
Q1-2016 50 49.63 47.87
Q2-2016 50 50.22 47.72
Q3-2016 50 49.89 47.87
Q4-2016 50 49.77 48.02
Q1-2017 50 50.42 49.60
Q2-2017 50 51.51 50.92
Q3-2017 50 53.08 52.27
Q4-2017 50 54.27 53.52
Q1-2018 50 55.58 55.20
Q2-2018 50 56.49 55.86
Q3-2018 50 56.59 55.06
Q4-2018 50 56.35 54.05

Positive forecast for the first quarter of 2019

The general outlook for the first quarter of 2019 is clearly positive for overall manufacturing, and more leaders are optimistic about the next quarter than was the case in the previous survey. The index for the general outlook for the coming quarter is now over 60 and is at its highest level since the fourth quarter of 2010.

Industry leaders report that investment plans are slightly adjusted upwards and the growth rate for employment is expected to increase further. New orders from both the home and export market are also expected to increase further. The same is expected for the total stocks of orders.

Figure 4. General judgement of the outlook in next quarter for manufacturing

Turning point value Smoothed seasonally adjusted
Q1-2009 50 40.17
Q2-2009 50 43.98
Q3-2009 50 47.54
Q4-2009 50 50.26
Q1-2010 50 53.24
Q2-2010 50 56.05
Q3-2010 50 59.01
Q4-2010 50 61.00
Q1-2011 50 60.13
Q2-2011 50 57.55
Q3-2011 50 56.03
Q4-2011 50 56.04
Q1-2012 50 56.38
Q2-2012 50 56.19
Q3-2012 50 55.53
Q4-2012 50 55.13
Q1-2013 50 55.15
Q2-2013 50 55.01
Q3-2013 50 54.81
Q4-2013 50 54.70
Q1-2014 50 54.15
Q2-2014 50 53.36
Q3-2014 50 51.63
Q4-2014 50 48.52
Q1-2015 50 45.37
Q2-2015 50 43.45
Q3-2015 50 42.96
Q4-2015 50 44.21
Q1-2016 50 46.88
Q2-2016 50 50.42
Q3-2016 50 53.04
Q4-2016 50 53.85
Q1-2017 50 54.23
Q2-2017 50 55.06
Q3-2017 50 56.72
Q4-2017 50 58.28
Q1-2018 50 59.08
Q2-2018 50 58.83
Q3-2018 50 59.12
Q4-2018 50 60.49

The industrial confidence indicator for the fourth quarter of 2018 was 9.0 (seasonally-adjusted net figures). This is more or less unchanged compared with the previous quarter. This is the sixth consecutive quarter where the indicator is positive, and the indicator is well above the historical average of 3.2. 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.

1 Industrial confidence indicator is the arithmetic average of the answers (balances) to the questions on production expectations, total stock of orders and inventories of own products (the latter with inverted sign).

Figure 5. Industrial confidence indicator¹

Seasonally adjusted Average 1990-2018
Q1-2009 -19.3 3.2
Q2-2009 -7.9 3.2
Q3-2009 -2.9 3.2
Q4-2009 0.1 3.2
Q1-2010 3.2 3.2
Q2-2010 4.4 3.2
Q3-2010 8.8 3.2
Q4-2010 11.1 3.2
Q1-2011 9.1 3.2
Q2-2011 8.5 3.2
Q3-2011 5.6 3.2
Q4-2011 6.0 3.2
Q1-2012 9.0 3.2
Q2-2012 6.4 3.2
Q3-2012 0.8 3.2
Q4-2012 4.9 3.2
Q1-2013 1.4 3.2
Q2-2013 1.1 3.2
Q3-2013 6.3 3.2
Q4-2013 8.0 3.2
Q1-2014 6.5 3.2
Q2-2014 6.2 3.2
Q3-2014 1.8 3.2
Q4-2014 -1.7 3.2
Q1-2015 -3.6 3.2
Q2-2015 -9.2 3.2
Q3-2015 -6.5 3.2
Q4-2015 -8.2 3.2
Q1-2016 -6.7 3.2
Q2-2016 -2.8 3.2
Q3-2016 -3.7 3.2
Q4-2016 -0.4 3.2
Q1-2017 1.5 3.2
Q2-2017 2.8 3.2
Q3-2017 3.6 3.2
Q4-2017 6.5 3.2
Q1-2018 6.7 3.2
Q2-2018 9.1 3.2
Q3-2018 8.9 3.2
Q4-2018 9.0 3.2

Capacity utilisation is slightly increasing

The average capacity utilisation for Norwegian manufacturing has increased further, and was calculated to 79.6 per cent at the end of the fourth quarter of 2018.The corresponding figure for the third quarter was 79.3 per cent. This is below the historical average of 80.2 per cent. International comparisons of average capacity utilisation are available from Eurostat (EU).

Figure 6. Capacity utilisation in per cent for manufacturing

Smoothed seasonally adjusted Average 1990-2018
Q1-2009 76.8 80.16
Q2-2009 76.0 80.16
Q3-2009 76.3 80.16
Q4-2009 76.8 80.16
Q1-2010 77.1 80.16
Q2-2010 77.8 80.16
Q3-2010 78.5 80.16
Q4-2010 78.9 80.16
Q1-2011 79.5 80.16
Q2-2011 79.8 80.16
Q3-2011 79.6 80.16
Q4-2011 79.6 80.16
Q1-2012 79.7 80.16
Q2-2012 79.7 80.16
Q3-2012 79.8 80.16
Q4-2012 79.8 80.16
Q1-2013 79.4 80.16
Q2-2013 79.3 80.16
Q3-2013 79.5 80.16
Q4-2013 80.0 80.16
Q1-2014 80.4 80.16
Q2-2014 80.5 80.16
Q3-2014 80.1 80.16
Q4-2014 79.3 80.16
Q1-2015 78.4 80.16
Q2-2015 77.4 80.16
Q3-2015 76.7 80.16
Q4-2015 76.9 80.16
Q1-2016 77.1 80.16
Q2-2016 77.2 80.16
Q3-2016 77.0 80.16
Q4-2016 76.9 80.16
Q1-2017 77.1 80.16
Q2-2017 77.6 80.16
Q3-2017 77.8 80.16
Q4-2017 77.8 80.16
Q1-2018 78.2 80.16
Q2-2018 78.8 80.16
Q3-2018 79.3 80.16
Q4-2018 79.6 80.16

The average number of working months covered by the current stock of orders was 4.0 in the fourth quarter of 2018. This is the same value as the previous quarter, and above the historical average for the indicator.

Figure 7. Number of working months covered by current stock of orders for manufacturing

Smoothed seasonally adjusted Average 1990-2018
Q1-2009 4.23 3.9
Q2-2009 3.97 3.9
Q3-2009 3.77 3.9
Q4-2009 3.74 3.9
Q1-2010 3.83 3.9
Q2-2010 3.95 3.9
Q3-2010 4.12 3.9
Q4-2010 4.25 3.9
Q1-2011 4.31 3.9
Q2-2011 4.37 3.9
Q3-2011 4.34 3.9
Q4-2011 4.13 3.9
Q1-2012 4.00 3.9
Q2-2012 4.09 3.9
Q3-2012 4.26 3.9
Q4-2012 4.32 3.9
Q1-2013 4.29 3.9
Q2-2013 4.20 3.9
Q3-2013 4.15 3.9
Q4-2013 4.26 3.9
Q1-2014 4.45 3.9
Q2-2014 4.50 3.9
Q3-2014 4.42 3.9
Q4-2014 4.36 3.9
Q1-2015 4.28 3.9
Q2-2015 4.24 3.9
Q3-2015 4.23 3.9
Q4-2015 4.18 3.9
Q1-2016 4.05 3.9
Q2-2016 3.94 3.9
Q3-2016 3.93 3.9
Q4-2016 3.97 3.9
Q1-2017 4.04 3.9
Q2-2017 4.09 3.9
Q3-2017 4.09 3.9
Q4-2017 4.08 3.9
Q1-2018 4.07 3.9
Q2-2018 4.05 3.9
Q3-2018 4.03 3.9
Q4-2018 4.01 3.9

The resource shortage indicator went up slightly compared with the previous quarter. This was due to more leaders reporting that the lack of skilled labour was a limiting factor for production and more leaders reporting full capacity utilisation.

Almost the same numbers of business leaders as in the previous survey reported that weak demand and strong competition are limiting factors for production in the fourth quarter of 2018. However, the number that point this out as a challenge has fallen considerably since the turn of the year 2015/2016.

Figure 8 below shows how the indicators that represent resource shortage have increased since the bottom of 2016, while demand and competition represent a minor challenge for manufacturing.

Figure 8

Bottlenecks in production in current quarter. Smoothed seasonally adjusted

Timelines

The survey data was collected in the period from 7 December to 18 January 2018.

 Assessment of industries in Q2 2018 and the short-term outlook¹

1 An overall evaluation of the present situation and expected short-term developments.   2 Very good: ++, Good: +, Stable: ~, Poor: -, Very poor: --, Good, but with certain negative indications: +(-), A situation where the + and - factors even out: +/-, Poor, but with certain positive indications: -(+)
Industry Evaluation 2
Food, beverages and tobacco +
Wood and wood products +
Paper and paper products +(-)
Basic Chemicals +(-)
Non-ferrous metals +(-)
Fabricated metal products ++
Computer and electrical equipment ++
Machinery and equipment ++
Ships, boats and oil platforms +(-)
Repair, installation of machinery +

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