Low activity in the Mainland Economy continues in April

New figures from the National Accounts show that the Gross Domestic Product (GDP) for Mainland Norway had modest growth in April, after decreasing throughout the 1st quarter. The Norwegian economic situation was still marked by strict restrictions. As local infection rates varied, restrictions were eased in some areas and tightened in others during the month. In the middle of April, the first phase of the government’s plan to reopen Norway was implemented.

- Activity in the Mainland Economy decreased throughout the 1st quarter and was still low in April. Looking at the details, the picture is somewhat varied, but the tendency is that activity in the industries that were hardest hit by infection control measures have flattened out, says head of the National Accounts of Norway, Pål Sletten.

Production of services increased 0.4 per cent in April. Financial insurance activities contributed to the growth, while wholesale and retail trade, as well as the accommodation and food service industry decreased and thus dampened the growth.

- Because Easter comes at a different time each year the figures in March and April are less certain than in other months, Sletten adds.

Despite the monthly decline, wholesale and retail trade was still at a higher level in April than before the outbreak of the Covid-19 pandemic. Activity in the accommodation and food service industry was already at a low level at the outset of 2021 and declined further in the 1st quarter. After decreasing in April, activity was at its lowest since March and April of 2020. Transportation excluding ocean transport, arts, entertainment and other services, and administrative and support services were also at very low levels in April 2021, despite these industries experiencing stable monthly development.

Production of other goods was approximately unchanged from March to April. Construction contributed negatively, while electricity production increased.

Manufacturing of food products, chemicals and pharmaceuticals saw growth in April. Manufacturing, repair and installation of machinery and equipment declined, as did shipbuilding. In total the manufacturing industry increased 1.3 per cent from March to April. Statistics Norway’s Index of industrial production reported a 1.9 per cent decline in manufacturing in the same period. The discrepancy is caused by differing seasonal adjustment routines, that may occasionally give deviations in monthly development.

Consumption

Household consumption of goods increased 0.8 per cent in April, particularly caused by growth in car purchases. Declining consumption of food products, however, dampened the growth. On the other hand, household consumption of services declined 1.6 per cent. Decreasing consumption of accommodation and food service activities was the most significant contribution to the downturn. In sum, household consumption fell by 0.6 per cent in April.

Final consumption expenditures of the general government increased 0.9 per cent in April. Developments in government consumption is based on several indicators but will be revised when general government and municipal accounts for the 2nd quarter is published. Current figures should thus be considered preliminary. Given the unusual circumstances, the uncertainty is greater than normal.

Exports and imports

Total exports increased 4.7 per cent in April. Strong growth in exports of crude oil and natural gas was a major contributing factor. Exports of traditional goods declined 2.8 per cent, particularly caused by low exports of metals. Imports were at about the same levels in March and April. Imports of traditional goods increased, while imports of services were stable. Imports of ships declined, mostly due to high levels in February and March when several expensive ships were imported.

Imports have declined more than exports since the beginning of the Covid-19 outbreak. With the further growth in April, total exports are close to the levels seen before the pandemic. Total imports are, however, about 16 per cent lower than in February 2020.

Investments

Gross fixed capital formation increased 0.9 per cent in the three-month period February-April 2021, compared with the previous three-month period. In the same period dwelling services increased 2.3 per cent, and monthly growth was at 1.7 per cent from March to April.

For gross fixed capital formation 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.

Revisions

In connection with new monthly figures, there will be revisions. The statistical sources used will usually not be changed for previous months, but the seasonally adjusted series can still be affected. This is caused by the basis for seasonal adjustments changing when data for new periods is added.

In the current situation, the uncertainty is greater than normal. Revisions are therefor to be expected, also due to potential changes in the underlying data for previously published months. GDP for Mainland Norway in March 2021 is revised up from -0.5 to -0.4 per cent¹. Quarterly growth is, however, not revised since the last publication.

In some areas, new statistical sources have been incorporated for previous months. The macroeconomic picture, however, remains mostly as previously published.

¹ The figure was corrected from -0.3 to -0.4 per cent.