The business tendency survey for the 1st quarter of 2023 shows that overall industrial production was unchanged compared to the previous quarter. 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 experiencing an increase in production while the 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. report a decline. Producers of Covers industries such as food products and beverages, printing and reproduction, pharmaceuticals and furniture. report about the same production level as in the 4th quarter. There are a lower proportion of the industrial leaders who report that lack of access to skilled labor, raw materials and other input factors have limited production volume in the 1st quarter (see figure 6). The situation related to the lack of raw materials and other input factors has gradually improved in recent quarters, but the proportion reporting that this limits production is still somewhat higher than normal. This is linked to logistics challenges on the world market. The improvement in recent quarters is probably related to the fact that China has relaxed its strict corona policy and largely opened society to economic activity. The war in Ukraine and the energy crisis in Europe still create challenges. The general situation is very uncertain, report industry leaders.
Industrial leaders report growth in total industrial employment in the 1st quarter 2023. There is clear employment growth within producers of capital goods, while for producers of consumer goods and intermediate goods report unchanged employment.
Large differences in new orders between the manufacturing sectors
Overall, industrial leaders report a decline in new orders from the domestic market in the 1st quarter of the year, while new orders from the export market is unchanged. There is a clear decline for the producers of intermediate goods from both domestic and export market. The is reported a moderate decline from the domestic and export market for the producers of consumer goods. Producers of capital goods, on the other hand, report a clear increase in new orders from both, the domestic and export markets.
Reduced demand contributes in the total stock of orders in manufacturing remain unchanged in the 1st quarter. For producers of intermediate goods, a clear decrease in total stock of orders is reported, while producers of consumer goods report a moderate decrease. Producers of capital goods, on the other hand, report a strong rise in overall stock orders. Producers of capital goods cover much of the supplier industry, and the increase in the stock orders for these producers may be related to increased estimates for oil investments in 2023.
Industrial managers are reporting significant growth in the prices, both in domestic and export market for overall manufacturing in the 1st quarter. Price growth is reported for all types of goods in both markets. For producers of consumer goods, the growth in prices is particularly strong. The levels of the diffusion indexes for prices on export and domestic markets are somewhat lower than in the previous quarter, which suggest that the rate of growth is on the way down.
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 1st quarter. The level of the diffusion index for cost prices is marginally lower than in the previous quarter, but it is still among the highest measured since this indicator began to be measured in the fourth quarter of 2011. It is producers of consumer goods who have the highest growth in cost prices. Overall, stronger growth in cost prices than in product prices was reported, it is intuitively 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 1st quarter.
Mixed expectations for the 2nd quarter of 2023
The general outlook for the 1st quarter of 2023 is unchanged for manufacturing as a whole, but there are large differences between the sectors. Only producers of capital goods show optimism. The producers of intermediate goods and consumer goods have a pessimistic view of the coming quarter.
The industrial leaders expect an increase in total production volume and a moderate increase in average employment in the 2nd quarter of 2023 compared to the 1st quarter of 2023. Unchanged new orders from the domestic market is expected, while an increase is expected for the export market. An increase is expected for the overall stock orders. It is the producers of intermediate goods who report the weakest future prospects. They expect a decrease in production volume and new orders from the domestic market in the 2nd quarter. Producers of consumer goods also expect a decrease in production and new orders from domestic market, but the decrease is expected to be more moderate. The producers of capital goods show, on the other hand, an increase in all these indicators. In addition, clear growth in employment is expected by the producers of capital goods.
The far more positive development and prospects for producers of capital goods may be related to the fact that in the 4th quarter 2022 a number of new field developments on the Norwegian continental shelf were decided, which have given many new contracts to the Norwegian supplier industry, which is increase production to a greater extent, particularly within the industries ships and oil platforms as well as machine industry. Producers of all types also expect that the prices of intermediate goods will continue to increase in the 2nd quarter of 2023.
Industry leaders report that investment plans are adjusted downwards for manufacturing. 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 a higher proportion of industrial leaders who state that the expected development in demand 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 high and at the same level as in the previous quarter.
The industrial confidence indicator points to unchanged activity for the 2nd quarter of 2023
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 1st quarter of 2023 was minus 0.4 (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 an increase from minus 3.3 from the previous quarter. The indicator is still below the historical average of 3.0
The industrial confidence indicator indicates a clear decline in production in the coming quarter for the producers of intermediate goods, while it gives indications of a clear growth for the producers of capital goods. For the producers of consumer goods, the indicator suggests unchanged production in the coming 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.
Demand and strong competition limit production
There are a higher proportion of industry leaders who highlight that weak demand and strong competition are factors that contributed to limiting production in the 1st quarter of 2023. There is also still a high proportion of industry managers who point out that a lack of qualified labor and access to "raw materials and/or electricity" are factors that contributed to limiting production in the 1st quarter, but the proportions have been descending in the last quarters. 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. is still high, but it has also fallen gradually in recent quarters.
The figure shows that the proportion of industrial managers, who point out that a lack of qualified labor and access to raw materials and/or electricity are factors that contribute to limiting production, peaked in the 1st quarter of 2022, and has since decreased somewhat. At the same time, the figure shows that the proportion of industry leaders who point out that weak demand and strong competition have limited production reached a bottom in the 1st quarter, and has since risen somewhat.
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 79.1 per cent at the end of the 1st quarter. This is marginally lower than at the end of the 4th quarter 2022. The capacity is now 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 March to 18 April 2023.
As of this publication, new indicators are introduced in the statistics. The indicator «Cost prices» and «Profitability» for actual and expected changes in the next quarter are published in the table «08264: Business tendency survey. Tendencies» Cost prices measure the development in the prices that the company pays for the goods and services that are included in the production of the final item (raw material). As well as on the prices of the capital goods (production equipment and facilities used in the production process) that the company purchases or, in those cases where another part is responsible for the entire investment project, the price of the investment delivery. Profitability measures 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 this case, it is not considered factors that affect the company's profits that are not directly linked to the company's main activity (eg. sales of electricity). In addition, a new statistics bank table is published which shows reasons that limit the company's investment activity: «12786: Business tendency survey. Limiting factors for investments». For "Limiting factors for investments", business leaders are asked to choose the most important reasons that limit new investments (several answers possible). If they have not planned investments, they can use the option «No special». The reasons that are measured are these: «Access to credit» if they plan to invest in new real capital, but have problems establishing enough financing. «Expected development in demand» if they expect lower demand and for that reason it is risky to invest in new capacity. The alternatives for investment costs are used if it is considered that «Prices for Capital Good» and /or «Financing cost» are so high that it limits the implementation of planned investments. «Governmental requirement» if they conclude that public requirements related to an investment (for example environmental requirements) are so high that planned investments are limited. «Access to governmental subsidy» if the planned investments are limited by rejection of an application for public grants or that the grants are too low. «Available production capacity» if at the end of the quarter they have spare production capacity and for that reason do not wish to carry out planned investments at the present time. Companies that have other limiting factors than those specified in the form, use the option «Other factors» where the business leaders can specify what these factors are.
