Business tendency survey for manufacturing, mining and quarrying, Q4 2002

According to the Business Tendency Survey conditions for the manufacturing industry worsened significantly during the fourth quarter of 2002. There are clear signs of a decline in output and capacity utilisation, and a growing number of leaders report of falling employment. Average capacity utilisation is estimated to be about 78 per cent - the lowest result ever recorded in this survey. Total stock of orders fell for the seventh consecutive quarter.

Never before have so many leaders pointed at the combined effect of weak demand and growing competition as factors that limit production. An exceptionally strong Norwegian currency makes it harder to compete in foreign markets and cheaper to import from them.

Few signs of an early recovery

For the fourth consecutive quarter general outlooks are reported to be worse in the short run. Widespread expectations of falling employment and low prices in export markets contribute to explain this result. A majority of leaders anticipate a further decline in export prices in the medium run.

Intermediate goods: Decline in total stock of orders

Sectors producing intermediate goods - pulp, paper and paper products, chemical industry, basic metals and others - report on stable development in output and capacity utilisation, while overall employment rate and total stock of orders continue to show clear signs of stagnation. A growing number of leaders are of the opinion that weak demand and/or tougher competition limit production. This view is supported by the negative development in home- and export prices.

General outlooks are considered to be worse than in the previous survey, but the trend shows signs of levelling out. A growing number of leaders expect a decline in export prices in the medium run.

Capital goods: Worsening conditions

Sectors producing capital goods, such as metal products, machinery and equipment, offshore-related activity and others, report on a marked decrease in output, capacity utilisation and the rate of employment. Total stock of orders is back at the extremely low level recorded in the first half of 1999, and a growing number of leaders point at competition as factor that limits production. Lack of qualified labour is no longer considered to be a problem.

General outlooks are considered to be poor. The pertinent indicator fell for the sixth consecutive quarter and has reached the lowest level ever recorded in this survey. Expectations of a decline in prices and new orders received contribute to explain this development. A considerable majority of leaders expect export prices to fall also in the medium run.

Consumer goods: Growing competition in home and export markets

Sectors producing consumer goods - food industry, publishing, pharmaceutical industry and others -report of stable output and capacity utilisation. Total stock of orders remains more or less unchanged. Failing demand and weak export prices constitute a growing problem. Few leaders consider lack of raw materials and/or electric power to be a factor that limits production.

General outlooks are more or less unchanged from the previous survey. An expected rise in output, domestic prices and total stock of orders are counteracted by negative signals concerning employment and export prices.