Greater uncertainty for manufacturing

The activity level in Norwegian manufacturing is still high and the growth in output in the third quarter was somewhat stronger than expected. Due to weaker demand, lower export prices and reduced order backlogs, industrial leaders nevertheless find their prospects bleaker than they have been for a long time.

The economic crisis in Asia and Russia has now caught up with Norwegian industry. Volatile foreign exchange markets and higher interest rates are other factors affecting the industrial leaders' assessment of fourth quarter prospects.

Industrial output continued to grow in the third quarter, albeit at a slower pace compared to the same time last year. Traditional export industry and offshore-related industries provided most of the momentum here.

The activity level of all intermediate goods-producing industries (including traditional export industries) was also high in the third quarter, although some softening has been seen in the past few quarters. Over the past few quarters, activity has also fallen--from an extremely high level--in the capital goods-producing sectors (machinery and equipment, production of platforms, etc.). Manufacturing leaders expect a slight weakening in output in the fourth quarter, and have a much more uncertain view of their prospects in coming quarters.

Sluggish international markets

New orders in the third quarter were clearly lower than expected, particularly in export markets. Demand in traditional export industries (pulp and paper, basic chemicals and basic metals) has fallen off considerably in recent months in the wake of international price trends and greater competition in the domestic and export markets.

Domestic demand still shows moderate growth, although it is slower compared to this time last year. A growing percentage of companies said that sluggish demand or greater competition in the Norwegian market was placing a damper on output. Thirty-nine per cent reported such limitations in the third quarter, up from 34 per cent in the second quarter. In the fourth quarter around 45 per cent of the companies expect to see these problems. Overall unfilled orders fell slightly in the third quarter after the particularly slow influx of new orders from export markets.

New Statistics
General Business Tendency Survey, 3rd quarter, 1998.
The statistics are published quarterly in the Weekly Bulletin of Statistics. For more information, contact: Tom.Langer.Andersen@ssb.no, tel. +47 21 09 47 29.

Weekly Bulletin issue no. 44, 1998