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According to the general business tendency survey, the manufacturing industry as a whole saw increased seasonally adjusted production in the first quarter, and output is still high. Increased demand in the home market is an important factor behind the trend. The growth in new orders from the domestic market, which over the past few quarters has been relatively stable and high, slowed somewhat in the first quarter of this year. A somewhat weaker performance in the first quarter seems to be the general case for most manufacturing sectors.
Industrial activity is high and the outlook for second quarter 1997 is bright, Statistics Norway's general business tendency survey shows. Large order backlogs and expectations of higher output and demand are key factors in the equation.
After declining in the first half of last year, the demand from export markets improved somewhat in the second half. First quarter trends indicate relatively moderate growth in demand. The first quarter trends may, to some extent, have been influenced by the strengthened exchange rate for the Norwegian krone. However, international trends indicate that export related industries are still facing weak markets.
The total stock of orders increased in the first quarter. Through the last quarters the growth rate has been fairly stable. The expectations related to the growth in stock of orders now seems more dampened than during the upturn last year. This picture of the current situation for orders also finds support in the indicator showing the average number of working months covered by the stock of orders at the current level of production. This indicator turns out fairly stable around 3,5 - 3,9 months, where the increased level for first quarter reflects the growth in new orders during the last quarters. Based on relatively large stocks of orders and an expected stable growth in demand from home markets, the industry leaders expect production to be high also in second quarter.
The capacity utilization for the manufacturing industry increased somewhat to just below 83 per cent, seasonally adjusted, in first quarter. Industries producing capital goods had the highest level somewhat above 88 per cent, highly influenced by the developement activity on the Norwegian continental shelf. For consumer goods industries the rate turned out slightly below 79 per cent. For intermediate goods industries the rate fell below 82 per cent in first quarter, after being on a level of 87 - 88 per cent during 1995-96. The decline in the trend to a large degree reflects the weak international markets.
The high activity in industry is also reflected in bottlenecks in production and an emerging tendency of shortage of inputs. The indicator of resource shortage shows that the supply of labour, raw materials etc. has become an increasing problem through the last years. The indicator fell back somewhat in first quarter after showing a peak in the second half of last year.
Weekly Bulletin issue no. 17, 1997