Expected activity increase in manufacturing

The business tendency survey for the fourth quarter of 2018 2018 shows an increase in total production compared with the third quarter of 2018. The growth is particularly strong among producers of intermediate goods, but also producers of capital goods and consumer goods report a production increase in the fourth quarter for 2018. 

The overall employment in manufacturing went up in the fourth quarter of 2018. It is particularly producers of capital goods that report employment growth. Higher workloads and large projects among petroleum-related producers is the main reason for the increment in employment for manufacturers of capital goods.

The total stocks of orders went up

New orders from both the domestic and export market show an increase in the fourth quarter of 2018, but the growth rate seems to be somewhat lower than what was reported in the previous quarter. At the same time, industry leaders report that the total stocks of orders has increased, and it is particularly producers of intermediate goods that contribute to this growth. 

Producers of capital goods report an increase in the total level of new orders, but the growth rate in new orders from the domestic market has fallen compared to the third quarter of 2018. For consumer goods, there was an increase in new orders from the domestic market, while new orders from the export market were more or less unchanged.

For the seventh consecutive quarter, a price increase has been reported both in the home and the export market. Hence the positive trend continues in the fourth quarter of 2018, with price growth in both markets for overall manufacturing. At the same time, industry leaders report a lower growth rate for export prices compared with the previous quarter. Producers of capital goods reported a higher growth rate for prices in the domestic market. This indicates that improved market conditions and increased capacity utilisation among petroleum-related producers are pushing up prices when new contracts are about to be signed.

Positive forecast for the first quarter of 2019

The general outlook for the first quarter of 2019 is clearly positive for overall manufacturing, and more leaders are optimistic about the next quarter than was the case in the previous survey. The index for the general outlook for the coming quarter is now over 60 and is at its highest level since the fourth quarter of 2010.

Industry leaders report that investment plans are slightly adjusted upwards and the growth rate for employment is expected to increase further. New orders from both the home and export market are also expected to increase further. The same is expected for the total stocks of orders.

The industrial confidence indicator for the fourth quarter of 2018 was 9.0 (seasonally-adjusted net figures). This is more or less unchanged compared with the previous quarter. This is the sixth consecutive quarter where the indicator is positive, and the indicator is well above the historical average of 3.2. 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.

Capacity utilisation is slightly increasing

The average capacity utilisation for Norwegian manufacturing has increased further, and was calculated to 79.6 per cent at the end of the fourth quarter of 2018.The corresponding figure for the third quarter was 79.3 per cent. This is below the historical average of 80.2 per cent. International comparisons of average capacity utilisation are available from Eurostat (EU).

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

The resource shortage indicator went up slightly compared with the previous quarter. This was due to more leaders reporting that the lack of skilled labour was a limiting factor for production and more leaders reporting full capacity utilisation.

Almost the same numbers of business leaders as in the previous survey reported that weak demand and strong competition are limiting factors for production in the fourth quarter of 2018. However, the number that point this out as a challenge has fallen considerably since the turn of the year 2015/2016.

Figure 8 below shows how the indicators that represent resource shortage have increased since the bottom of 2016, while demand and competition represent a minor challenge for manufacturing.

Timelines

The survey data was collected in the period from 7 December to 18 January 2018.

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