Signs of optimism in manufacturing

The business tendency survey for the first quarter of 2017 shows that the downturn in total production has levelled off compared with the fourth quarter of 2016. For manufacturers of capital goods, there was a further decline in production due to the low activity among suppliers to the oil and gas sector. This is particularly affecting industries such as machinery and equipment, and building of ships and oil platforms.

• See more figures in the statistics Business tendency survey for manufacturing, mining and quarrying

Producers of intermediate goods reported a growth in production in the last quarter. There was an increase in industries such as wood and wood products and basic chemicals. At the same time there was increased production within consumer goods, especially for manufacturers of food products. The decline in production of capital goods was offset by the increase in the other industrial groupings, leading to a levelling off of the total industrial production. This is the first time since the first quarter of 2015 that the overall production trend has not been negative.

The overall employment declined in the first quarter of 2017. The decline stems from capital goods and consumer goods, while intermediate goods show an increase. The fall in employment was most significant among producers of capital goods, which are particularly affected by the reduced investment activity in the oil and gas sector. 

Improvement for the domestic market

There was a decline in the total stock of orders in the first quarter. New orders from the domestic market increased for the first time since the first quarter of 2014. In the export market, the number of new orders fell. Producers of capital goods saw a decline in new orders from both markets, and in the stock of orders. For manufacturers of intermediate goods there was an increase in new orders from both markets and an increase in the stock of orders. Manufacturers of consumer goods also saw an increase in new orders from both markets and in the stock of orders.

Overall, prices were slightly down for the export market, while remaining almost unchanged for the domestic market. For producers of capital goods, there was a decline in prices in both markets, while producers of intermediate goods and consumers goods had an increase in both markets.

Positive expectations for the second quarter of 2017

The general outlook for the second quarter of 2017 is positive. Business leaders report that investment plans have been adjusted upwards slightly and that employment will see a further drop. New orders from both the domestic market and export market are expected to increase. The total stock of orders is expected to see a slight increase. Producers of intermediate goods and consumer goods are optimistic about the second quarter, while manufacturers of capital goods have an almost unchanged view on the matter.

The industrial confidence indicator in the first quarter was 1.1 (seasonally-adjusted net figures), up from -0.2 in the previous quarter. This is the first time since the third quarter of 2014 that this indicator has been positive, but it is still below the historical average of 3.0. Values above zero indicate that total output will grow, 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).

Decrease in capacity utilisation

The average capacity utilisation for Norwegian manufacturing had a marginal decrease and was calculated to 76.6 per cent at the end of the first quarter of 2017, compared with 76.9 in the fourth quarter of 2016. This is below the historical average of 80.3 per cent. International comparisons of average capacity utilisation are available from Eurostat (EU).

The average number of working months covered by the current stock of orders was 4.1 in the first quarter of 2017. This is around the same level as the previous quarter, and above the historical average for the indicator of 3.9.

The resource shortage indicator remains at the same level as the previous quarter. There is still little shortage of labour, good access to raw materials and electrical power, and few industry leaders are reporting full capacity utilisation.

Timeliness

The survey data was collected in the period from 9 March 2017 to 19 April 2017. 

 

Assessment of Q1 2017 and the short-term outlook¹