Food products contributed to output growth in manufacturing in July

The index level for Norwegian manufacturing in the period May-July 2020 amounted to 111.2 (2005=100). The corresponding figure for the previous three-month period was 116.1. Figure 1 shows that the development in seasonally-adjusted figures was relatively stable in 2019 and until February this year, before the output dropped considerably from March 2020.

Monthly change: the output growth was driven by a few sectors

According to seasonally-adjusted figures, manufacturing output saw a solid increase of 1.8 per cent from June to July 2020. This increase came after several months with low activities in manufacturing. The industry grouping food and beverages contributed the most to the overall production increase, followed by the industry grouping refined petroleum, chemicals and pharmaceuticals. These two industry groupings registered an increase of 6 and 7.7 per cent respectively. The increase within food and beverages can be explained by an increase in demand from Norwegian grocery stores.

While it was observed a solid output growth in manufacturing in total, there were several sectors that were still strongly affected by the effects of Covid-19 in July. Among them, fabricated metal products contributed the most to dampen the overall output increase, followed by machinery and equipment.

Three-month change: significant fall in manufacturing production

According to seasonally-adjusted figures, manufacturing output saw a clear fall of as much as 4.2 per cent in the period May-July 2020. The steep fall must be seen in relation to the effects of Covid-19 on manufacturing activities since the middle of March. Refined petroleum, chemicals and pharmaceuticals contributed the most to this decline with a drop of as much as 7.7 per cent. Several labour intensive industries also experienced a strong decline in production in the same period, including several of the industries within petroleum-related manufacturing.

Monthly change: solid output growth in the Euro area in June 2020

Estimated figures from Eurostat, the EU’s statistical office, indicate that manufacturing output in the Euro area had a solid growth of as much as 10 per cent from May to June 2020. This increase followed a growth in manufacturing output in May, after two months with severe fall in production, caused by the actions taken to mitigate the spreading of the Covid-19 virus. However, the output was still low compared with the same period last year.

In the same period, Norwegian manufacturing production increased marginally with 0.2 per cent. Sweden and Denmark had an increase of 9.3 and 4 per cent respectively.

For more information on the development in European manufacturing sector in June, see this article from Eurostat.

Three-month change: decline in the total production index

According to seasonally-adjusted figures, the total production index (PII) covering extraction, mining, manufacturing and electricity supply saw a decrease of 1.7 per cent in the period May-June 2020 compared to the previous three-month period. Extraction of crude petroleum had a growth of 2.6 per cent, while extraction of natural gas decreased with 3.7 per cent. For more details about oil and gas extraction in this period, see the press release from The Norwegian Petroleum Directorate.

Within support activities for petroleum and natural gas extraction, there was a severe output drop of as much as 11 per cent in the period May-July 2020. Strict infection control rules combined with the low oil price are among the factors explaining the low activity level.

In the same period, mining and quarrying saw a decline of 9.7 per cent, while Norwegian electricity supply increased by 3.6 per cent.