Decline in manufacturing output continues

The index level for Norwegian manufacturing in the period March -May 2020 amounted to 113.1 (2005=100). The corresponding figure for the previous three-month period was 119.3. Figure 1 shows that the development in seasonally-adjusted figures has been relatively stable the last year, before the output drops significantly from March 2020.

Since March, April and May 2020 are specified as outliers in the seasonal adjustment routine, the latest trend figures are not representative for the actual development. Hence, the trend figures for 2020 are not included in figure 1. For more details, see the information box regarding the Covid-19 virus by the end of the article.

Monthly change: severe downturn in export- related manufacturing in May

According to seasonally-adjusted figures, manufacturing output saw a decline of 3 per cent from April to May 2020. This decline follows after a decrease of 1.6 per cent from March to April. The decline in May was particularly related to export-related manufacturing. The industry grouping refined petroleum, chemicals and pharmaceuticals contributed the most to the overall manufacturing decline with an output drop of as much as 14 per cent. The fall was particularly related to low production of pharmaceutical products. Low global demand due to the Corona-situation explains the reduced production level. In addition, non-ferrous meals also saw a clear fall of 9.6 cent, partly due to the decline in the European automotive industry. 

On the other hand, the activity within the industry grouping furniture and manufacturing n.e.c., as well as in building of ships, boats and oil platforms saw signs of recovery. The former experienced a substantial output growth of 29.5 per cent, while the latter went up with 4.7 per cent.  The growth in these industries can be seen in context with less strict infection control rules.

Three-month change: historical drop in manufacturing output

According to seasonally-adjusted figures, manufacturing output saw a clear decline of as much as 5.2 per cent in the period March –May 2020 compared with the previous three-month period. This is the largest output drop registered for a three-month period in this time series which goes back to 1990. The steep fall is due to the fact that all three months in this period have seen low production levels as a result of the Corona-situation. Ships, boats and oil platforms contributed the most to the decline in this period with a substantial drop of as much as 30 per cent.

On the other hand, food products dampened the overall output decline with a solid production increase in this period. The growth must be seen in context with high demand from the Norwegian grocery sector.

Monthly change: Large output drop in the Euro area in April 2020

Estimated figures from Eurostat, the EU’s statistical office, indicate that manufacturing output in the Euro area fell by as much as 18 per cent from March to April 2020. This strong output decline was caused by the actions taken to mitigate the spread of the Covid-19 virus. Production of durable consumer goods, such as automobiles, saw the strongest output decline, followed by investment goods. Large European manufacturing countries such as Germany, France and Italy all saw an output decline of more than 20 per cent.

In the same period, Norwegian manufacturing went down with 1.6 per cent. In two of our neighboring countries, Sweden experienced a severe drop of as much as 17 per cent, while Denmark had a decline of 4.5 per cent.

For more information on the development in European manufacturing sector in April, see this article from Eurostat.

Three-month change: increase in extraction of crude petroleum and electricity supply

According to seasonally-adjusted figures, the total production index (PII) covering extraction, mining, manufacturing and electricity supply saw an increase of 1.4 per cent in the period March –May 2020 compared with the previous three-month period. Extraction of crude petroleum had a clear growth of 9.5 per cent, while extraction of natural gas decreased by 2.4 per cent. The oil and gas production was not significantly affected by the Corona-situation in the period March-May 2020. The growth in oil and gas extraction in this period can partly be related to the opening of a new oil field in the autumn of 2019. For more details about oil and gas extraction in this three-month period, see the press release from The Norwegian Petroleum Directorate.

Within support activities for petroleum and natural gas extraction, there was a severe output drop of 13 per cent in the period March –May 2020 compared with the previous three-month period. Strict infection control rules combined with the low oil price and reduced exploration on the Norwegian continental shelf explains the low activity level.

In the same period, mining and quarrying saw an increase of 6 per cent, while Norwegian electricity supply increased by more than 24 per cent. The strong production level within electricity supply can partly be explained by increased production of hydro power in order to make room in the reservoirs for melting snow.