Business tendency survey for manufacturing, mining and quarrying, Q2 2002

Results from the second quarter 2002 show signs of improved conditions for the manufacturing industry. The manufacturing leaders report increased production and growing capacity utilisation, but this seems to have no effect on employment. The capacity utilisation for the manufacturing industry remains at about 80 per cent. New orders received from the export market continue to fall, but the downturn seems to be levelling out. Increased demand from the home market results in a moderate growth in total stock of orders. Export prices show a clear declining trend. The strong Norwegian currency must take part of the responsibility for this, since many of the export companies enter into contracts in foreign currency. Declining demand from export markets also contribute to this development.

The manufacturing leaders' assessments of the third quarter 2002 are slightly positive. There are expectations of growth in production and total stock of orders, but the prospects for the employment rate are still negative. There is no sign of recovery of export prices.

Concerning expected development the next 12 months, it is worthwhile noticing that the index figure recording expected growth in export prices has reached its lowest level ever registered in this survey. Presently more leaders predict a decline rather than a rise in this figure. Sectors producing capital goods (metal products, machinery and equipment, offshore-related activity and others) contribute the most to this development.

Intermediate goods: Signs of improvement

Sectors producing intermediate goods (pulp, paper and paper products, chemical industry, basic metals and others) report growth in production and capacity utilisation, and the downturn in total stock of orders seems to be levelling out. An increasing number of leaders are of the opinion that stronger competition in markets outside the EU is a factor that limits production. There is no sign of a recovery of prices.

General outlooks for the third quarter 2002 seem to be better. A rise in production and growth in capacity utilisation are expected, but this seems to have no effect on employment. An increasing number of leaders are of the opinion that stronger competition in export markets is going to limit production.

Capital goods: Decline in export prices

Sectors producing capital goods (metal products, machinery and equipment, offshore-related activity and others) continue to show growth in production and employment. The increase in capacity utilisation seems to be levelling out. Export prices continue to decline, and not since the survey started have so many manufacturing leaders reported a decline in these sectors.

For the first time since the fourth quarter 1999 a majority of leaders are of the opinion that general outlooks for the forthcoming quarter are negative. This is supported by expectations of a decline in production, capacity utilisation and employment. Prospects of a further decline in export prices contribute to darken the overall picture.

An increasing number of leaders, assessing the next 12 months, expect the decline in export prices to continue

Consumer goods: Stable development

Sectors producing consumer goods (food industry, publishing, pharmaceutical industry and others) report of stable development in production and capacity utilisation. A moderate growth in new orders received from the home market is levelled out by a corresponding decline in demand from the export markets. An increasing number of leaders report of falling prices and weaker demand from the export markets. The opposite is the case for the home market.

General outlooks for the forthcoming quarter are positive. This is supported by expectations of growth in production, capacity utilisation and new orders. There is a certain optimism regarding the development in the level of prices both in the short and the long run.