New figures from the National Accounts show that the gross domestic product (GDP) for Mainland Norway increased 0.8 per cent in the third quarter.
After the lifting of the last infection control measures earlier in the year, the economic activity in Mainland Norway showed promising growth until March. The growth flattened out towards the summer, but activity rose again in August and September. The rise in the third quarter was particularly driven by the service industries and especially in wholesale trade.
─ The activity increased in several industries in the third quarter, such as in parts of the manufacturing industry and also in the fishing industry. On the other hand, the activity in power production fell and thus reduced GDP, says Head of National Accounts, Pål Sletten.
The labor market has been tight in 2022; employment has increased significantly, labor force participation is high and unemployment is low. This has made it difficult for companies to fill vacancies, however employment continued to increase in the third quarter. So far in 2022, the number of employed people has increased by 59 200 people.
Prices have increased significantly in the past year, especially on energy products. Although wage growth appears to have increased somewhat in the third quarter, real wages have been significantly reduced. This reduces households' purchasing power, which contributes to dampening growth in consumption.
The rise in prices has increased business costs for production and investments. There are big differences between different industries and individual companies, but overall businesses seem to have been able to pass the cost growth onto the retail prices, so that the operating profit in the companies has not decreased.
The price of the gross product for Mainland Norway, which is the broadest measure of the domestic price level, was 6.5 per cent higher in the third quarter of 2022 than in the same period last year.
─ The increased prices, especially for oil and gas, has led to a record surplus on the trade balance. Measured in current prices, total GDP, including oil and gas extraction, was 67 per cent higher in the third quarter than at the beginning of 2021, says Sletten.
Industries
The service industries, including dwelling services, rose 1.2 per cent in the third quarter, and the growth was broadly based. The reopening has led to increased consumption of services, an increase in several service industries and increased consumption abroad. This resulted in reduced retail trade and VAT in Norway. However wholesale trade contributed the most to the overall growth in the Mainland economy in the third quarter. This is mainly due to increased sales of goods abroad as well as relatively high investments, which results in increased wholesale trade. There was also growth in accommodation and food service activities, arts, entertainment and other service activities, transport and administrative and support activities.
Other goods production, which includes the primary industries, electricity production and construction, rose 0.5 per cent. The increase was mainly due to increased activity in the primary industries, particularly in traditional fishing. Activity in the electricity, gas and steam industry fell, which helped to moderate the upswing.
The gross product in manufacturing and mining rose 1.4 per cent from the second to the third quarter. The activity was particularly high in July, due to maintenance in some manufacturing industries in the second quarter. The consumer-oriented manufacturing contributed most to the upturn, but there was also growth in export-oriented manufacturing and in supplier manufacturing.
Value added in general government increased 0.7 per cent in the third quarter. In central government, the gross product rose 0.9 per cent. The growth was driven by increased activity in public administration and health services. Activity in local government increased 0.5 per cent. Care services, kindergartens and after-school care accounted for the largest contribution.
Crude oil and gas extraction rose 7.6 per cent. Total GDP for Norway, including oil and gas extraction, pipeline transport and foreign shipping, increased 1.5 per cent. Measured in current prices, total GDP rose 12.5 per cent from the second to the third quarter.
Consumption
Household consumption increased 0.3 per cent from the second to the third quarter. Excluding Norwegian consumption abroad, consumption decreased 0.5 per cent. Measured in current prices, consumption rose 3.1 per cent. In September, the consumer price index increased 6.9 per cent compared to the same month the previous year.
Consumption of goods fell 2.1 per cent. The decline was broadly based. Consumption of furniture, clothes and shoes contributed in particular to the decline. There was also a decrease in the consumption of food and alcoholic beverages.
Service consumption increased 1.4 per cent and was driven by an increase in recreational and cultural services. This is largely due to an increase in package travel, which have been at very low levels since the corona pandemic began.
Consumption abroad increased 13 per cent in the third quarter and foreigners’ consumption in Norway rose by 7.7 per cent.
Total consumption in general government decreased 0.1 per cent in the third quarter. Consumption in central government rose 0.8 per cent, while in local government it fell 1.0 per cent.
Investments
Gross investments in Mainland Norway increased 0.5 per cent in the third quarter. Investments in general government and other services contributed most to the increase. Investments in production of other goods fell and dampened the increase. Investments in dwelling services fell for the third quarter in a row and declined 3.3 per cent in the third quarter.
Exports and imports
Total exports rose 5.7 per cent in the third quarter, measured at constant prices and adjusted for normal seasonal variation. There was an increase in exports of traditional goods, services, crude oil and natural gas. The rise in manufacturing, fishing and aquaculture in the third quarter has facilitated good growth in traditional goods exported. Measured in current prices, exports have more than doubled in the third quarter compared to last year.
Seasonally adjusted volume figures showed that imports increased 2.9 per cent. Imports of services as well as imports of traditional goods increased and contributed to the increase in imports. Overall, imports measured in current prices were 32.9 per cent higher in the third quarter of 2022 compared to the previous year.
Norway's trade balance was significantly strengthened, and the trade surplus is estimated at a record high 532 billion NOK in the third quarter.
Employment
Employment increased 0.5 per cent from the second to the third quarter. There was an increase in employment in most industries, particularly accommodation and food service and professional, scientific and technical activities. The number of hours worked increased 0.6 per cent. Wage growth was 0.2 per cent compared to the previous quarter.
Revisions
In connection with new monthly figures, there will be revisions. The statistics used will not normally change for previous months. Seasonally adjusted series can, however, be affected, since the basis for the seasonal adjustment changes when new periods are added. The National Accounts has published an article on the revisions in the monthly national accounts.
The major changes in the Norwegian economy during the COVID-19 pandemic may have led to relationships between indicators and accounting figures being different than in normal periods. The quarterly figures in 2021 and 2022 must therefore be regarded as more uncertain than usual.
In connection with the publication of figures for the third quarter of 2022, the base year has been updated with new information from the final national accounts for 2020. New information from and including the 1st quarter of 2020 has been incorporated for all quarters. In addition, some quality improvements have been carried out as part of a revision which is also incorporated for previous years to avoid structural breaks in the time series.
The decline in the Mainland economy for 2020 has been revised down from 2.3 to 2.8 per cent, and the rise in 2021 is unchanged. The first quarter of 2022 has been adjusted down from a decline of 0.4 to 0.5 per cent, and the increase in the second quarter has been adjusted upwards from 0.7 to 1.2 per cent.
In connection with the publication of the quarterly National Accounts for the 3rd quarter, Statistics Norway will publish the final National Accounts figures for 2020 on 18 November 2022. In addition to providing a more complete picture of the first year of the pandemic, certain revisions will be incorporated in National Accounts figures for previous years. The final national accounts for 2020 replaces the preliminary national accounts for 2020. While the latter is a projection based on indicators from the last published final annual accounts (2019), the final national accounts are based on much more detailed data sources. Particularly important is the business statements from enterprises, which provides a basis for more precise calculations of the gross product in the various industries. We will thus learn more about how the Norwegian economy fared in the first year of the pandemic. In conjunction with the publication of the final figures for 2020, certain quality improvements are also carried out. These changes are also incorporated for previous years to avoid breaks in the time series. The most significant revisions for previous years are: Improvements in the calculations of free banking services, so-called FISIM (Financial Intermediation Services Indirectly Measured). New data source and guidelines for production processes across national borders, where goods pass national borders without a change of ownership (processing) and income related to the purchase and sale of goods abroad (intermediary trade). New calculation scheme for the central bank's activity. The revisions are not expected to have a major impact on Norwegian GDP overall, but could affect the value added of individual industries, the composition of access to and use of Norwegian goods and services, and operating profit and wage cost shares in individual industries.