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Hard times for manufacturing
Norwegian industrial mangers report a further decline in total output. Poor demand is the main reason for this development. The general short-term outlook is yet considered to be less negative than what was reported in the first quarter of 2009.
According to the business tendency survey, the Norwegian manufacturing industry experienced rough conditions in the second quarter this year. There was a further decline in output and employment, and total stocks fell due to a lack of new orders in domestic and export markets. Many point at poor demand as a factor that limits production. This view is confirmed by a fall in market prices. Bottlenecks such as lack of capacity, shortage of qualified labour and supply of raw materials or electric power played no major role in restricting production. The number of working months covered by the current stock of orders remained quite high, but was significantly lower than in the corresponding quarter of 2008. Average capacity utilisation has fallen to 76 per cent. International comparisons of average capacity utilisation are available from EUROSTAT .
The general short-term outlook (Q3 2009) is considered to be poor, but fewer respondents share this view than in the previous survey. The industrial confidence indicator is estimated at -7 (seasonally-adjusted net figure). This is significantly higher than recorded in the previous survey. A reduction in stocks of finished goods is one of the reasons for this development. However, the result lies well below the historic average and indicates a further weakening of the business cycle. The decline is expected to be somewhat less steep than in the first half of 2009 (see Index of production ). International comparisons of the industrial confidence indicator are available from EUROSTAT (EU) and the Swedish National Institute of Economic Research (Sweden).
Lower stocks of finished goods
Sectors producing intermediate goods (wood and wood products, paper and paper products, non-metallic mineral products, basic metals etc.) experienced a significant decline in output and employment in the second quarter, and the market prices continued to fall. A low level of new orders in domestic and export markets explains these results. Lack of demand and fierce competition were considered as major bottlenecks by the respondents in question. The number of working months covered by the current stock of orders was significantly lower in the second quarter this year than in the same period last year, and average capacity utilisation fell to 73 per cent.
The general short-term outlook (Q3 2009) is considered to be poor, but somewhat fewer respondents share this view. Expectations of improved conditions for producers of wood and wood products partly explain this development. A decline in stocks of finished goods should also create a need to increase the production.
Weak demand causes decline in total stocks
Sectors producing capital goods (machinery and equipment, ships, boats and oil platforms etc.) experienced a decline in output and the level of new orders. However, total stocks of orders were still quite high. Market prices continued to fall in the second quarter, and the same was the case with employment. Lack of demand was a major concern among the respondents in question. Lack of capacity and shortage of qualified labour no longer seem to be a problem. Average capacity utilisation has fallen to 81.3 per cent. The number of working months covered by the current stock of orders remained at a high level, but the trend for this indicator is clearly negative.
The industrial managers within sectors producing capital goods consider the general short-term outlook to be poor, and many of them are considering a reduction in planned gross capital investments. Expectations of a further decline in output and demand support this result.
Growing optimism among producers of food products and beverages
Sectors producing consumer goods (food products, printing and reproduction, basic pharmaceuticals, furniture etc.) experienced a further decline in output and employment. Poorer demand from domestic markets and export markets explains these results. Market prices, however, continued to rise. A strong growth in prices of food products was the main reason for this development. Average capacity utilisation is estimated to be 73.7 per cent.
The indicator covering the general short-term outlook in these sectors is changing from neutral to positive. Expectations of improved conditions for producers of food products and beverages partly explain this result.
| Industry | Prospects | Background | |||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Food, beverages and tobacco | + | More or less unchanged levels of production and demand. Employment is reduced. Rice in domestic and export market prices. The general outlook for Q3 is judged as positive, and output and demand are expected to increase. | |||||||||||||||||||||||||||||||||||||
| Wood and wood products | -(+) | A large number of managers report lower levels of production, capacity utilisation and employment. Decline in new orders and market prices. The general outlook for the forthcoming quarter is considered as better, and new orders from the domestic market is expected to be more or less unchanged. Domestic market prices are expected to level out in Q3. Output, employment and new orders from the export market are expected to decline. | |||||||||||||||||||||||||||||||||||||
| Paper and paper products | -- | A great number of managers report reduced levels of production, capacity utilisation and employment. Decline in new orders and market prices. Planned gross capital investments are reduced, and the general outlook for Q3 is judged as worse. Output and new orders from the domestic market are expected to be more or less unchanged. Employment is expected to drop. Further decline in export market prices in Q3. | |||||||||||||||||||||||||||||||||||||
| Basic chemicals | -- | Lower levels of production, capacity utilisation and employment. Decline in new orders and market prices. Many managers report that poor demand is limiting production. The general outlook for Q3 is considered negative, but fewer managers than in the previous quarter share this opinion. A further decline in output, employment, new orders and market prices is expected. | |||||||||||||||||||||||||||||||||||||
| Non-ferrous metals | -- | Many managers report reduced levels of production, capacity utilisation and employment. New orders and market prices have dropped. Many managers report that poor demand is limiting production, and planned gross capital investments are reduced. General outlook for Q3 is judged as negative, but fewer managers than in the previous quarter share this opinion. Output, employment and new orders are expected to decline in Q3. | |||||||||||||||||||||||||||||||||||||
| Fabricated metal products | -- | Output, capacity utilisation and employment are reduced in Q2. Decline in new orders from domestic and export markets, and lower market prices. Poor demand is limiting production. General outlook for the forthcoming quarter is considered as worse, and lower levels of production, employment, new orders and market prices are expected in Q3. | |||||||||||||||||||||||||||||||||||||
| Computer and electrical equipment | -- | Reduced activity with lower levels of production, capacity utilisation and employment. Decline in new orders and reduced total stock of orders. Domestic market prices are reduced, while export prices are more or less unchanged. A large number of leaders judge the general outlook for Q3 as worse, and further reductions in output, employment and new orders are expected. Market prices are expected to fall. | |||||||||||||||||||||||||||||||||||||
| Machinery and equipment | -- | Lower levels of production, capacity utilisation and employment. Many managers report lower levels of new orders from domestic and export markets. Market prices are down. General outlook for the forthcoming quarter is considered as worse. Further reduction in the levels of production, employment and new orders are expected in Q3. Market prices are also expected to decline. | |||||||||||||||||||||||||||||||||||||
| Ships, boats and oil platforms | -- | An increasing number of managers report decline in production, capacity utilisation and employment. Total stock of orders is reduced, and many managers report that poor demand is limiting production. The average number of working months covered by the current stock of orders is reduced. General outlook for Q3 is judged as negative, and there are expectations of further declines in production, employment and new orders. Market prices are expected to drop. | |||||||||||||||||||||||||||||||||||||
| Repair, installation of machinery | -- | Output, capacity utilisation and employment are reduced in Q2. Decline in market prices and new orders from the domestic and export market. The general outlook for Q3 is considered as worse, and output, employment, new orders and market prices are expected to fall in the forthcoming quarter. | |||||||||||||||||||||||||||||||||||||
| The column for Prospects shows an overall evaluation of the present situation and expected short-term developments using the symbols + and -. The following codes and constellations are used: |
++
+ ~ - -- -(+) +/- |
Very good
Good Stable Poor Very poor Poor, but with certain positive indications A situation where the + and - factors even out. |
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Industrial confidence indicator (ICI)The 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). The indicator is leading for the level of industrial production because: Expected rise in the level of output gives signals of increased production in the forthcoming quarter. Increase in the total stock of orders indicates higher level of production due to the coming fulfilment of these orders. Increase in the inventories of own products indicates slow sales and reduced activity |
Documentation on seasonal adjustmentsStatistics Norway has developed general and survey specific documentation of seasonal adjustment practices. The documentation is based on the European Statistical System (ESS): Guidelines on seasonal adjustment . This documentation clarifies the seasonal adjustment practices in use in Statistics Norway, and simplifies a comparison between surveys. Different quality measures are also published in the survey specific documentation. The survey specific documentation is available in the left margin under About seasonal adjustments . The general documentation is available under: http://www.ssb.no/english/metadata/methods/seasonal_adjustments.pdf |
Important announcement: New industry classificationAs from the first quarter of 2009, a new version of Eurostat’s industry classification, NACE, will be in use. The most important change is that publishing and recycling no longer are included in the manufacturing industry. In addition, there are other changes that have an impact on the publication levels. This is a link to a general overview of the transition to the new industry classification. |
Additional information
The statistics provide current data on the business cycle for manufacturing, mining and quarrying by collecting business leaders’ assessments of the economic situation and the short term outlook.
Contact
-
Edvard Andreassen
E-mail: edvard.andreassen@ssb.no
tel.: (+47) 40 90 23 32
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Ståle Mæland
E-mail: stale.maeland@ssb.no
tel.: (+47) 95 05 98 88