The business tendency survey for the 2nd quarter of 2024 shows that overall industrial production increased moderately, but there are large sector differences. Producers of Covers industries such as wood and wood products, paper and paper products, basic chemicals and basic metals. Often referred to as traditional export industries. and Covers industries such as food products and beverages, printing and reproduction, pharmaceuticals and furniture. report unchanged production. The producers of Covers industries such as machinery and equipment, ships, boats and oil platforms, repair and installation. Often referred to as the engineering industry. are still experiencing an clear increase in production.
Total industrial production has had a flat or slightly falling development in the last 7 quarters. A clear downward trend for manufacturers of the product types intermediate goods and consumer goods has almost been offset by a clear growth for manufacturers of investment goods. The growth for manufacturers of investment goods in the last two years has been largely driven by the construction of oil platforms and modules industry.
– The extensive development activity on the Norwegian continental shelf has contributed significantly to counteracting the decline in production in Norwegian manufacturing, says adviser at Statistics Norway Edvard Andreassen.
Industrial leaders report growth in total industrial employment in the 2nd quarter. It is the producers of capital goods that are responsible for the growth. Producers of consumer goods and intermediate goods report unchanged employment.
Unchanged total stock of orders
Overall, industrial leaders report that new orders from the domestic market are unchanged in the 2nd quarter. This is the case for the producers of capital goods and consumer goods. Producers of intermediate goods, on the other hand, report lower new orders from the domestic market. It is also reported that there has been an increase in new orders from the export markets, overall. Producer of capital goods and intermediate goods report an increase of new orders from the export market, while the majority of the producers of consumer goods report a decrease.
Total stock of orders is unchanged in the 2nd quarter compared to the previous quarter. Manufacturers of intermediate goods report a fall in total orders, while it is unchanged for manufacturers of capital goods and consumer goods.
Many industrial managers are reporting significant growth in the prices, both in domestic and export market for overall manufacturing in the 2nd quarter. Price growth is reported within all the types of goods, but the growth is clearest for the producers of capital goods and consumer goods in both markets.
A large proportion of industrial managers report continued growth in The development in the prices that the company pays for the goods and services that are included in the production (product input), and on the prices of production equipment and facilities used in the production process. in the 2nd quarter. It is producers of consumer goods and capital goods that have the clearest growth in cost prices. Overall, when stronger growth in cost prices than in product prices was reported, it is not surprising that there are reports of declining The development in the profitability of the company's sales of goods or services. Profitability means the change in the difference between current operating expenses and current operating revenues. in manufacturing, as a whole, in the 2nd quarter for all the producer types.
Positive expectations for the 3rd quarter of 2024
The general outlook for the 3rd quarter of 2024 is positive for manufacturing. The producers of all types of goods are optimistic, but producers of capital goods are most positive about the coming quarter.
The industrial leaders expect higher production volume and growth in average employment in the 3rd quarter, compared to the 2nd quarter. An increase in new orders from both the domestic and export markets is expected. Total stock of orders is also expected to increase in the 3rd quarter.
It is the producers of capital goods who report the best future prospects. They still expect clear growth in production and employment, and growth in new orders from both markets, and an increase in the total stock of orders. The diffusion indices for most of these expectation indicators are somewhat higher than they were in the previous survey.
The producers of intermediate goods and consumer goods report somewhat weaker future prospects. Both expect moderate growth in overall production and new orders from the domestic market, and unchanged stock of orders. Producers of intermediate goods expect growth in new orders from the export market, while producers of consumer goods expect unchanged new orders from the export market.
It is also expected that intermediate prices and prices of products sold to both the domestic market and the export market will continue to increase in the 3rd quarter.
Industry leaders report that investment plans remain unchanged for manufactoring as a whole. In the survey of 3rd quarter of 2021, a new statistics table (see box at the bottom of the article) was introduced. This table shows the development in which factors the managers state as limiting the investments. In this quarter, there is still a higher proportion of industrial leaders who state that financing costs limits investments. The proportion of industrial leaders who believe that the The prices of the investment goods (production equipment and facilities used in the production process) that the company purchases are so high that it limits the implementation of planned investments. are a limiting factor on investment is still relatively high.
The industrial confidence indicator predicts increased activity in the 3rd quarter
This is the average of the responses (balances) to the questions on expected volume of production, total stock of orders and inventories of own products for sale (the latter with an inverted sign). See Definitions in ‘About the statistics’ for further details. in the 2nd quarter of 2024 was 3.9 (Figures that are adjusted for calendar effects and seasonal variation. Such adjustment gives a more accurate picture of the underlying trend in the time series and makes it easier to compare the results of subsequent quarters.) which is up from 0.6 in the previous quarter. The indicator is now above the historical average of 2.9.
The industrial confidence indicator indicates unchanged production in the coming quarter for manufacturers of intermediate goods. For producers of capital goods and consumer goods, it gives indications of increased overall production in the 3rd quarter.
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.
Access to qualified labor limits production
The proportion of industry leaders reporting that weak demand and strong competition limit is still relatively high but has fallen slightly compared to the share in the previous quarter. At the same time, historically speaking, there is still a high proportion of industry managers who point out that a lack of qualified labor is a factor that contributed to limiting production in the 2nd quarter. The sum of percentages for those who have reported that lack of qualified labour and raw materials/electric power limits production, plus the percentage of establishments with capacity utilisation above 95 per cent. which was very high in connection with the pandemic, has stabilized at lower levels in the past year.
The average How much of the available production capacity is utilised. A high capacity utilisation means that it is difficult to produce more without investing, while a low capacity utilisation means having capacity that is not being used. for Norwegian manufacturing was calculated to 78.5 per cent at the end of the 1st quarter. This is marginally higher than at the end of 1st quarter. The capacity utilization has now risen for two quarters in a row after two years of continuous decline in this indicator, which had a local peak in the 1st quarter of 2022. The capacity utilisation is still at a lower level than the historical average of 80.0 per cent. International comparisons of average capacity utilisation are available from Eurostat (EU).
Timelines
The survey data was collected in the period from 7 June to 23 July 2024.
