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The industrial leaders' general appraisal of the outlook for the coming quarter were less optimistic this time than they have generally been in recent years. The studies show that this trend is found in most business sectors, but that the size of the diminished expectations varies somewhat. Many conditions have affected the leaders' evaluations.
Statistics Norway's economic barometer shows that industrial leaders are less optimistic in their evaluation of the outlook for the 3rd quarter of 1998. Weaker demand, lower export prices, increased costs and an expected weaker demand in the coming quarters are some of the factors that are emphasised. The level of activity, however, is still high.
Weaker demand
The demand for exports was weaker in the 2nd quarter than it has been in a long time. A diminished demand is partly a result of weak international prices for key export industries. Shipyards have had noticeable problems with demand in recent quarters because of changes in the subsidy schemes for new constructions. Noticeably reduced order backlogs create uncertainty about prospects and also affect the industry's evaluations of them. For some sectors of the export-oriented industries, the demonstrably weaker Asian markets have also become a more noticeable problem. New orders from the domestic market continue to grow, but are weaker than in recent quarters.
Increased costs
A number of industrial sectors have had production stoppages in the 2nd quarter as a result of strikes. This may have influenced the assessment of the short-term outlook. The wage settlements entail a noticeable increase in costs for many industries. Increased costs in combination with weak international prices contribute to reduced profitability and increased uncertainty related to future prospects for many industries.
Weekly Bulletin issue no. 30-31, 1998