Declining growth rate for mainland GDP in august

After a marked increase in the level of activity due to the gradual reopening of society in May and June, growth was lower in July. New figures from the National accounts show that growth slowed further in August.

- July and August are vacation months, and this affects figures for both summer months. They should therefore be interpreted with caution. Looking at the two combined, we still get a clear picture that the growth is slowing down, says Pål Sletten, head of national accounts.

The largest contributions to monthly growth came from manufacturing and administrative and support service activities. Both industry areas were still at a low level compared with February. Gross product in manufacturing was just over 3 per cent lower than before the corona crisis. The development in administrative and support service activities must be seen in the context of a very weak July. The level in August was still over 30 per cent lower than in February.

The mixed picture for service industries continues

Accommodation and food service activities, arts, entertainment and other service activities, as well as transport activities excluding ocean transport, experienced the largest percentage declines at the start of the corona crisis. The industries experienced strong growth in May and June because of eased infection control measures. In July, growth slowed, while developments in August were more mixed.

Accommodation and food service activities declined somewhat in August. Figures from the accommodation statistics showed a particular decline for hotels in larger cities. Arts, entertainment and other service activities, on the other hand, grew slightly. Transport activities excluding ocean transport experienced a decline for the first time since April, especially due to reduced activity in air transport. Activity in these industries were between 20 and 30 per cent lower in August than in February.

Activity in administrative and support service activities rose sharply in August. The industry had been falling continuously since February until July, when it experienced its strongest decline to date. The rise in August should, as mentioned, be seen in the context of a highly unusual and low activity level in July, which i.a. was due to travel agencies and tour operators. The industry area includes the hiring of labor, which has declined sharply following the outbreak of the corona pandemic.

Activity in health and social work services was about unchanged in July and August, and the level of activity in August was still about 2.5 per cent lower than in February. Wholesale and retail trade were also unchanged in August. Reduced activity in the retail trade was offset by an increase in car sales.

Overall, the service industries rose 1.6 per cent in August, but activity was still 5.7 per cent lower than in February.

Production of other goods fell by 2.7 per cent in August and was thus about 2.4 per cent below the level in February. The monthly development in aquaculture was weak and pulled activity in the industry aggregate, while fishing contributed positively.

Manufacturing saw a strong development in August and rose close to 6 per cent. An increase in the production of metals and machinery increased growth, while the pharmaceutical industry slowed down. The level of gross product in manufacturing is still just over 3 per cent lower than in February.

Production of oil and natural gas increased 1.6 per cent in August. Overall, GDP, including oil extraction and ocean transport, rose 0.7 per cent in August.

Consumption

Household consumption fell 0.6 per cent in August. There was a decline in the consumption of goods, but an increase in consumption of services dampened the fall. Household consumption in August was 8.3 per cent lower than in February.

Consumption of goods fell 3.8 per cent in August but was still 5.2 per cent higher than in February. It is primarily the purchase of food and beverages, furniture and household items that has risen since the corona pandemic broke out. The decline in August was mainly due to food and non-alcoholic beverages, clothing and shoes, sports equipment, as well as furniture. These product groups had unusually high consumption in June and July, and the level in August is higher than it was in August 2019.

Service consumption rose 2.5 per cent in August. This is mainly due to the consumption of leisure services, which picked up somewhat after a weak month in July, characterized by fewer holiday trips than normal. Despite four consecutive months of growth, service consumption in August is 12.7 per cent lower than in February.

Consumption in general government rose 1.1 per cent in August. The development in public consumption is based on various indicators but will be revised when accounts for central and local government for Q3 2020 are available. They must therefore be considered as preliminary and uncertain.

Investments

Following a growth of 2.7 per cent in July, gross fixed capital formation fell 1.3 per cent in August. This is mainly due to a decline in households' investment in housing.

For investments in fixed capital, there is generally weak access to sound monthly information. For petroleum investments, investments in manufacturing, mining and power supply, information on planned investments as reported by the companies has been used.

Exports and imports

Exports of goods and services fell 0.9 per cent in August. The decline is primarily due to a reduction in crude oil exports. Farmed fish, which in the previous two months has been a contributor to the growth in exports, reduced exports in August. Exports of metals, and especially of aluminum, have picked up after a challenging period. This also applies to the export of machinery and equipment. In total, exports of traditional goods in August were back at about the same level as before the corona pandemic and were 0.8 per cent lower than in August 2019.

Imports of goods and services increased 0.5 per cent in August. Imports of services increased, especially due to increased consumption of foreign services. The increase is due to a rise in travel abroad following the easing of travel restrictions this summer. Norwegians' consumption abroad is still over 80 per cent lower compared with February. Imports of traditional goods, on the other hand, declined slightly, mainly due to lower imports of refined petroleum products. Excluding refined oil products, imports of traditional goods increased in August. Imports of traditional goods were also back at about the same level as before the corona pandemic and were 1.1 per cent higher than 12 months earlier.

Revisions

In connection with new monthly figures, there will be revisions. The statistics used will not normally change backwards, but seasonally adjusted series can still be affected. This is a consequence of the fact that the basis for the seasonal adjustment changes when new periods are added. The National Accounts recently published an article on the revisions in the monthly national accounts.

In the current situation, the uncertainty is greater than normal. Revisions are therefor to be expected, also due to potential changes in the background data for previously published months.

In some areas, new statistics have been incorporated for previous months. With the publication of figures for August 2020, the monthly growth in Mainland Norway's GDP in July was revised up from 1.1 to 1.3 per cent.