New figures from the National Acounts show zero-growth in GDP Mainland Norway from Q1 to Q2 2024, adjusted for seasonal and calendar effects, and measured in constant prices. At the same time, the level of activity in oil and gas extraction was unusually high for the time of year. This contributed to significant growth in total GDP and exports. Household consumption increased 1.6 per cent due to a sharp upswing in car purchases.
– Growth in the mainland economy has been unusually weak over the past year, and this trend continued in Q2 2024, says Pål Sletten, Head of National Accounts at Statistics Norway.
Preliminary figures show that the total number of employed persons was unchanged from the 1st to the 2nd quarter, while the number of hours worked decreased by 0.1 per cent. Labour productivity is measured as value added per hour worked and this measure has developed weakly since 2022. However, the productivity figures in preliminary National Accounts are uncertain and must be interpreted with caution.
High activity on the Norwegian continental shelf
Seasonal and calendar-adjusted volume in the oil and gas extraction industry increased 5.6 per cent in Q2 2024, despite unadjusted figures showing lower volumes than in the previous quarter. Q2 is usually a period with a lot of maintenance work and reduced gas production on the Norwegian shelf. This year, however, gas production was high for the time of year. This results in strong seasonally adjusted growth.
– So far in 2024, the production volumes in the extraction of oil and gas is greater than it was a year ago. A lot of maintenance work on the gas infrastructure was carried out last year. This may have made it possible to maintain higher gas production this year, says Sletten.
Oil and gas exports showed the same development as production in the 2nd quarter, and increased significantly adjusted for seasonal and calendar effects. Measured in constant prices, total Norwegian exports increased 5.6 per cent in the 2nd quarter, largely due to the increase in exports of crude oil and natural gas.
Gross fixed capital formation in oil and gas extraction including pipeline transport increased 10.0 per cent in Q2, following a similar decline in the previous quarter. Overall, investment activity is at a high level, as gross fixed captial formation increased sharply through 2023.
Mixed development in the Mainland economy
A decline in traditional fishing dampened the growth in GDP Mainland Norway in both the 2nd quarter. This can be seen in connection with reduced catch quotas for important fish species.
Value added in construction has declined every quarter since early 2023, and the decline continued in Q2 2024. The decline is largely due to a sharp drop in household dwellings investments.
On the other hand, increased value added in wholsale and retail trade and in production of electricity contributed to psoitively to the growth in Mainland Norway’s GDP. Traditional fishing and electricity are industries that are affected by non-cyclical conditions, and they usually fluctuate quite a bit over time. Excluding fishing and electricity, growth in Mainland GDP would have been 0.2 per cent in Q2.
Strong growth in households purchases of cars
Household consumption increased 1.6 per cent from Q1 to Q2 2024, measured in constant prices. The largest contribution to the growth was increased consumption of cars. Household car purchases have been at unusually low levels through 2023 and Q1 2024. In Q2, however, car consumption picked up sharply.
It must be noted that figures for consumption of cars can fluctuate widely. Imports of vehicles are sometimes delivered in large batches. The purchases may have taken place some time ago, but only when the deliveries arrive are the purchases registered in the national accounts' figures.
– Strong growth in car purchases pulled up household consumption in the 2nd quarter, but the figures for car purchases can fluctuate significantly and the growth must be interpreted cautiously. Apart from the upturn in Q2, car consumption has been on the decline since the beginning of 2023, says Sletten.
Excluding means of transport, the growth in household consumption would have been 0.7 per cent, pulled up by food and beverages and clothing and footwear.
Subdued price developments
Overall, the domestic price level in Norway remained unchanged from Q1 to Q2, measured by the GDP-deflator for Mainland Norway. Prices increased in the service industries, while prices in the electricity industry decreased.
Overall, prices of crude oil and natural gas increased in the 2nd quarter. However, the rise in oil and gas prices came after a similar decline in the previous quarter.
Revisions
In connection with new monthly and quarterly figures, previous figures will be revised. New information is occasionally incorporated in the calculation of certain national accounts figures. In addition, the seasonal pattern will change as new periods are added.
In some areas, new statistics have been incorporated in the figures for Q1 2024. This means that the growth in mainland Norway's GDP in Q1 has been revised downwards by 0.1 percentage points from the previous quarterly publication on 16 May.
Figures for some end-uses have also been revised in Q1. This applies in particular to exports of traditional goods, where the new information base for external trade results in a sharp downward adjustment. Otherwise, general government consumption and total fixed capital investment have been revised down somewhat. Total household consumption is approximately unchanged.