Positive signals from manufacturing

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Norwegian industrial managers report a production increase level and an increment of new orders in the second quarter of 2018. The general expectations for the third quarter of 2018 are also positive among most of the industry leaders.

The business tendency survey for the second quarter of 2018 shows an increase in total production compared with the first quarter of 2018. Manufacturers of capital goods, intermediate goods and consumer goods report all of an increase in production in the second quarter of 2018.

The overall employment shows a moderate increase in the second quarter of 2018. Producer of intermediate goods reported employment growth while producers of consumer goods and capital goods reported a slight increase.

Figure 1. Production and employment for manufacturing. Changes from previous quarter. Smoothed seasonally adjusted

Turning point value Total volume of production Average employment
Q1-2009 50 37.62 36.18
Q2-2009 50 39.78 36.65
Q3-2009 50 44.58 39.40
Q4-2009 50 47.89 42.41
Q1-2010 50 50.02 44.54
Q2-2010 50 51.33 45.43
Q3-2010 50 52.03 46.99
Q4-2010 50 53.23 50.45
Q1-2011 50 55.35 53.88
Q2-2011 50 55.91 54.72
Q3-2011 50 55.06 54.23
Q4-2011 50 54.22 53.62
Q1-2012 50 53.23 53.64
Q2-2012 50 52.47 54.08
Q3-2012 50 52.02 54.27
Q4-2012 50 51.02 53.14
Q1-2013 50 49.77 52.28
Q2-2013 50 50.84 52.38
Q3-2013 50 52.61 51.58
Q4-2013 50 54.00 50.57
Q1-2014 50 54.53 49.96
Q2-2014 50 53.00 49.72
Q3-2014 50 51.18 49.88
Q4-2014 50 50.45 49.01
Q1-2015 50 48.27 45.15
Q2-2015 50 46.28 41.06
Q3-2015 50 46.57 39.04
Q4-2015 50 47.57 39.39
Q1-2016 50 48.83 41.13
Q2-2016 50 49.17 42.23
Q3-2016 50 47.30 42.05
Q4-2016 50 46.70 42.77
Q1-2017 50 47.92 44.93
Q2-2017 50 49.14 47.43
Q3-2017 50 50.40 49.62
Q4-2017 50 51.06 50.44
Q1-2018 50 51.74 50.44
Q2-2018 50 53.36 50.78

Increase in new orders in the second quarter

New orders from both domestic and export market, show an increase in the second quarter of 2018. The total stock of orders increased as well during the same period. New orders from the domestic market and the total stock of orders also show an increase during this period. New orders show an increase from both domestic and export market for all three different industrial groupings.

Figure 2. New orders received for manufacturing. Changes from previous quarter. Smoothed seasonally adjusted

Turning point value New orders received from home markets New orders received from export markets
Q1-2009 50 32.46 28.00
Q2-2009 50 37.37 38.02
Q3-2009 50 42.34 41.09
Q4-2009 50 44.47 43.87
Q1-2010 50 46.91 47.57
Q2-2010 50 50.77 51.75
Q3-2010 50 53.53 53.41
Q4-2010 50 55.36 54.20
Q1-2011 50 57.30 53.28
Q2-2011 50 56.91 50.38
Q3-2011 50 54.89 48.05
Q4-2011 50 55.02 47.23
Q1-2012 50 55.12 48.04
Q2-2012 50 52.56 48.87
Q3-2012 50 49.78 46.58
Q4-2012 50 49.08 44.64
Q1-2013 50 48.21 45.03
Q2-2013 50 48.87 47.96
Q3-2013 50 50.60 52.38
Q4-2013 50 50.77 54.92
Q1-2014 50 50.12 54.83
Q2-2014 50 49.89 53.06
Q3-2014 50 48.15 49.60
Q4-2014 50 46.31 46.11
Q1-2015 50 44.51 43.50
Q2-2015 50 43.19 42.21
Q3-2015 50 43.08 43.38
Q4-2015 50 44.36 44.09
Q1-2016 50 45.95 43.22
Q2-2016 50 46.88 42.61
Q3-2016 50 47.22 43.69
Q4-2016 50 49.14 45.76
Q1-2017 50 50.28 47.86
Q2-2017 50 49.98 49.51
Q3-2017 50 51.39 50.40
Q4-2017 50 53.11 51.77
Q1-2018 50 54.16 54.16
Q2-2018 50 55.69 55.70

Prices went up for both export and domestic markets for the manufacturing industry in the second quarter of 2018. Producers of intermediate goods and consumer goods saw an increase in prices in both markets. Underlying factors for the rise in prices for these two industrial groupings were increased prices on basic metals and food products. For producers of capital goods, there were almost unchanged prices in the export market, while the domestic markets showed a slight increase.

Figure 3. Prices on products for manufacturing. Changes from previous quarter. Smoothed seasonally adjusted

Turning point value Prices on products at home markets Prices on products at export markets
Q1-2009 50 44.77 45.16
Q2-2009 50 44.35 43.94
Q3-2009 50 46.02 44.06
Q4-2009 50 46.22 43.85
Q1-2010 50 46.72 45.52
Q2-2010 50 49.06 49.27
Q3-2010 50 51.35 51.55
Q4-2010 50 53.53 52.68
Q1-2011 50 55.81 52.84
Q2-2011 50 54.84 49.98
Q3-2011 50 52.60 46.55
Q4-2011 50 52.00 44.99
Q1-2012 50 51.89 45.55
Q2-2012 50 51.44 46.21
Q3-2012 50 51.88 45.44
Q4-2012 50 51.77 44.43
Q1-2013 50 51.12 45.05
Q2-2013 50 52.18 47.18
Q3-2013 50 53.10 49.99
Q4-2013 50 53.62 53.04
Q1-2014 50 54.42 53.31
Q2-2014 50 54.23 51.57
Q3-2014 50 53.46 50.83
Q4-2014 50 53.19 51.69
Q1-2015 50 51.14 50.55
Q2-2015 50 48.73 49.31
Q3-2015 50 48.27 49.66
Q4-2015 50 48.82 49.02
Q1-2016 50 49.71 47.93
Q2-2016 50 50.24 47.79
Q3-2016 50 49.81 47.80
Q4-2016 50 49.73 47.93
Q1-2017 50 50.54 49.69
Q2-2017 50 51.53 51.03
Q3-2017 50 52.97 52.15
Q4-2017 50 54.22 53.40
Q1-2018 50 55.55 55.11
Q2-2018 50 57.12 56.53

Positive expectations for the third quarter in 2018

The general outlook for the third quarter of 2018 is clearly positive for the different industrial groupings. Industry leaders report that investment plans are adjusted upwards and employment is expected to increase. The total stock of orders is expected to increase as well.

Figure 4. General judgement of the outlook in next quarter for manufacturing

Turning point value Smoothed seasonally adjusted
Q1-2009 50 40.17
Q2-2009 50 43.98
Q3-2009 50 47.54
Q4-2009 50 50.26
Q1-2010 50 53.24
Q2-2010 50 56.05
Q3-2010 50 59.01
Q4-2010 50 61.00
Q1-2011 50 60.13
Q2-2011 50 57.55
Q3-2011 50 56.03
Q4-2011 50 56.04
Q1-2012 50 56.38
Q2-2012 50 56.19
Q3-2012 50 55.53
Q4-2012 50 55.13
Q1-2013 50 55.16
Q2-2013 50 55.00
Q3-2013 50 54.79
Q4-2013 50 54.71
Q1-2014 50 54.17
Q2-2014 50 53.35
Q3-2014 50 51.59
Q4-2014 50 48.54
Q1-2015 50 45.42
Q2-2015 50 43.43
Q3-2015 50 42.88
Q4-2015 50 44.25
Q1-2016 50 47.00
Q2-2016 50 50.34
Q3-2016 50 52.94
Q4-2016 50 53.75
Q1-2017 50 54.10
Q2-2017 50 54.81
Q3-2017 50 56.50
Q4-2017 50 58.22
Q1-2018 50 59.21
Q2-2018 50 59.08

The industrial confidence indicator for the second quarter of 2018 was 9.2 (seasonally-adjusted net figures), up from 6.8 in the previous quarter. This is fourth consecutive quarter where the indicator is positive and the indicator is well above the historical average. Values above zero indicate that total output will grow in the forthcoming quarter, while values below zero indicate that total output will fall. International comparisons of the industrial confidence indicator are available from Eurostat (EU), The Swedish National Institute of Economic Research and Statistics Denmark.

1 Industrial confidence indicator is the arithmetic average of the answers (balances) to the questions on production expectations, total stock of orders and inventories of own products (the latter with inverted sign).

Figure 5. Industrial confidence indicator¹

Seasonally adjusted Average 1990-2018
Q1-2009 -19.3 3.1
Q2-2009 -7.9 3.1
Q3-2009 -2.9 3.1
Q4-2009 0.1 3.1
Q1-2010 3.2 3.1
Q2-2010 4.5 3.1
Q3-2010 8.8 3.1
Q4-2010 11.1 3.1
Q1-2011 9.1 3.1
Q2-2011 8.5 3.1
Q3-2011 5.6 3.1
Q4-2011 6.0 3.1
Q1-2012 9.0 3.1
Q2-2012 6.5 3.1
Q3-2012 0.7 3.1
Q4-2012 4.8 3.1
Q1-2013 1.4 3.1
Q2-2013 1.2 3.1
Q3-2013 6.2 3.1
Q4-2013 8.0 3.1
Q1-2014 6.5 3.1
Q2-2014 6.3 3.1
Q3-2014 1.6 3.1
Q4-2014 -1.7 3.1
Q1-2015 -3.6 3.1
Q2-2015 -8.9 3.1
Q3-2015 -6.7 3.1
Q4-2015 -8.2 3.1
Q1-2016 -6.7 3.1
Q2-2016 -2.6 3.1
Q3-2016 -4.0 3.1
Q4-2016 -0.4 3.1
Q1-2017 1.6 3.1
Q2-2017 2.9 3.1
Q3-2017 3.2 3.1
Q4-2017 6.6 3.1
Q1-2018 6.8 3.1
Q2-2018 9.2 3.1

Capacity utilisation still below the historical average

The average capacity utilisation for Norwegian manufacturing shows an increase and was calculated to 78.8 per cent at the end of the second quarter of 2018, compared with 78.2 in the first quarter of 2018. This is below the historical average of 80.2 per cent. International comparisons of average capacity utilisation are available from Eurostat (EU).

Figure 6. Capacity utilisation in per cent for manufacturing

Smoothed seasonally adjusted Average 1990-2018
Q1-2009 76.8 80.18
Q2-2009 76.0 80.18
Q3-2009 76.3 80.18
Q4-2009 76.8 80.18
Q1-2010 77.1 80.18
Q2-2010 77.8 80.18
Q3-2010 78.5 80.18
Q4-2010 78.9 80.18
Q1-2011 79.5 80.18
Q2-2011 79.8 80.18
Q3-2011 79.6 80.18
Q4-2011 79.6 80.18
Q1-2012 79.7 80.18
Q2-2012 79.7 80.18
Q3-2012 79.8 80.18
Q4-2012 79.8 80.18
Q1-2013 79.4 80.18
Q2-2013 79.3 80.18
Q3-2013 79.5 80.18
Q4-2013 80.0 80.18
Q1-2014 80.4 80.18
Q2-2014 80.5 80.18
Q3-2014 80.1 80.18
Q4-2014 79.4 80.18
Q1-2015 78.4 80.18
Q2-2015 77.3 80.18
Q3-2015 76.7 80.18
Q4-2015 76.9 80.18
Q1-2016 77.1 80.18
Q2-2016 77.2 80.18
Q3-2016 77.0 80.18
Q4-2016 76.9 80.18
Q1-2017 77.1 80.18
Q2-2017 77.6 80.18
Q3-2017 77.8 80.18
Q4-2017 77.9 80.18
Q1-2018 78.2 80.18
Q2-2018 78.8 80.18

The average number of working months covered by the current stock of orders was 4.0 in the second quarter of 2018. This is the same value as the previous quarter, and above the historical average for the indicator.

Figure 7. Number of working months covered by current stock of orders for manufacturing

Smoothed seasonally adjusted Average 1990-2018
Q1-2009 4.23 3.9
Q2-2009 3.97 3.9
Q3-2009 3.77 3.9
Q4-2009 3.74 3.9
Q1-2010 3.83 3.9
Q2-2010 3.95 3.9
Q3-2010 4.12 3.9
Q4-2010 4.25 3.9
Q1-2011 4.31 3.9
Q2-2011 4.37 3.9
Q3-2011 4.34 3.9
Q4-2011 4.13 3.9
Q1-2012 4.00 3.9
Q2-2012 4.09 3.9
Q3-2012 4.26 3.9
Q4-2012 4.32 3.9
Q1-2013 4.29 3.9
Q2-2013 4.20 3.9
Q3-2013 4.15 3.9
Q4-2013 4.26 3.9
Q1-2014 4.45 3.9
Q2-2014 4.50 3.9
Q3-2014 4.42 3.9
Q4-2014 4.35 3.9
Q1-2015 4.28 3.9
Q2-2015 4.24 3.9
Q3-2015 4.23 3.9
Q4-2015 4.18 3.9
Q1-2016 4.05 3.9
Q2-2016 3.94 3.9
Q3-2016 3.93 3.9
Q4-2016 3.97 3.9
Q1-2017 4.04 3.9
Q2-2017 4.10 3.9
Q3-2017 4.10 3.9
Q4-2017 4.06 3.9
Q1-2018 4.05 3.9
Q2-2018 4.02 3.9

The resource shortage indicator went slightly up compared with the previous quarter. There is a slight increase in the number of leaders reporting that the lack of skilled labour and supply of raw materials or power was a limiting factor for production. There is a slight increase in number of leaders reporting full capacity utilisation. At the same time, as many business leaders as the last quarter, report that weak demand and strong competition are limiting factors for production for the second quarter of 2018.

Figure 8

Figure 8. Bottlenecks in production in current quarter. Smoothed seasonally adjusted

Timelines

The survey data was collected in the period from 7 June to 19 July 2018.

Assessment of industries in Q2 2018 and the short-term outlook¹

1 An overall evaluation of the present situation and expected short-term developments.   2 Very good: ++, Good: +, Stable: ~, Poor: -, Very poor: --, Good, but with certain negative indications: +(-), A situation where the + and - factors even out: +/-, Poor, but with certain positive indications: -(+)
Industry Evaluation 2
Food, beverages and tobacco +
Wood and wood products ++
Paper and paper products ++
Basic chemicals +
Non-ferrous metals +
Fabricated metal products +
Computer and electrical equipment +
Machinery and equipment +
Ships, boats and oil platforms -
Repair, installation of machinery +

 

More information:

Eurostat: Business survey – Confidence indicator by sector

Eurostat: Business survey – Capacity utilization

National Institute of Economic Research (Sweden) – Economic Tendency Survey

OECD: Main Economic Indicators

 

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