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This is an archived release.
Another weak quarter for manufacturing
Results from the second quarter 2003 show difficult conditions for the manufacturing industry, but there are some indications of better days ahead. Sectors producing capital goods are facing a severe downturn in total demand.
According to the Business Tendency Survey the manufacturing industry experienced a further decline in output, capacity utilisation and employment throughout the second quarter of 2003. Weak demand in home and export markets constitutes a major problem, and total stock of orders continued to fall. An increase in the number of respondents that report of growth in export prices has to be seen in connection with a weakening of the Norwegian currency. Average capacity utilisation remained around 77 per cent, which is a very low figure.
About half of the respondents consider weak demand as a factor that limits production, while one fourth point at fierce competition. The fact that only 1 per cent of the managers mention supply of labour as a factor that limits production seems to confirm the negative development in the indicator covering average employment.
Improved conditions in the third quarter
For the first time since the first quarter of 2002 the optimists seem to be in majority concerning general outlooks for the manufacturing industry. This is supported by a rise in several indicators covering expected changes in the third quarter of 2003. Fierce competition and lack of demand, however, are still expected to be problematic.
Intermediate goods: Growth in export prices
Sectors producing intermediate goods (pulp, paper and paper products, chemical industry, basic metals and others) report of a stable development in output and capacity utilisation, but the average employment rate shows no signs of recovery. A significant increase in the number of respondents that report of growth in export prices causes this indicator to rise above 50 for the first time since the fourth quarter of 2000. Weak demand and fierce competition are still considered to be the main factors that limit production.
The indicator covering general judgement of the outlooks for the enterprise in the next quarter rose for the third consecutive quarter and is now above 50 per cent. An increase in the number of respondents that report of improved export prices support this result.
Capital goods: Lack of new orders
Sectors producing capital goods (metal products, machinery and equipment, offshore-related activity and others) are facing a serious downturn in total demand. Lack of new orders causes a decline in output, capacity utilisation and the average rate of employment. Average capacity utilisation has fallen to a very low level, but fewer report of an average capacity utilisation of less than 50 per cent. Compared with the second quarter of 2002 there is a 10 per cent increase in the number of respondents that mention competition as a factor that limits production.
General outlooks are considered to be poor, but an increasing number of respondents seem to be of the opposite opinion. The fact that total stock of orders is expected to stabilise supports this development. There are few signs of optimism in the medium run.
Consumer goods: Weak demand in export markets
Sectors producing consumer goods (food industry, publishing, pharmaceutical industry and others) report of stable development in output and capacity utilisation. Weak demand in export markets contributes to explain a possible decline in total stock of orders. Fewer respondents mention competition at the home market as a factor that limits production.
The indicator covering general judgement of the outlooks for the enterprise in the next quarter rose for the third consecutive quarter. This result is supported by growing expectations of a rise in output, capacity utilisation and export prices.
| Valuation of trades in the 2. quarter and the short term outlook |
| Kind-of-activity | Prospects | Background | |||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Food products, beverages and tobacco | + | Positive development with moderate growth in output and capacity utilisation. Somewhat reduced employment and reduced demand from the export market. Growth in home market prices, while prices in the export market continue to decline. General outlooks are judged as better, and rise in production is expected in the forthcoming quarter. | |||||||||||||||||||||||||||||||||||||
| Wood and products of wood | -(+) | Somewhat lover capacity utilisation and production in the 2. quarter. Reduced employment and total stock of orders. Positive development in export prices. A great number of leaders report that weak demand and hardened competition at the home market are limiting production. General outlooks for the forthcoming quarter are judged to be somewhat worse. | |||||||||||||||||||||||||||||||||||||
| Pulp, paper and paper products | +(-) | Increase in output, capacity utilisation and prices in the export market. Reduced employment and new orders received both from the home and export market in the 2. quarter. General outlooks are considered to be unchanged, and production and capacity utilisation are expected to remain the same in the 3. quarter. The leaders expect further reduction in employment. | |||||||||||||||||||||||||||||||||||||
| Basic chemicals | +(-) | A great number of leaders judge the general outlooks to be better; production and the total stock of orders are expected to rise in the 3. quarter. This is supported by expectations of an increase in new orders received and prices from the export market. These judgements are in contrast to the development in the 2. quarter, which was characterized by reduced output and low level of new orders received. | |||||||||||||||||||||||||||||||||||||
| Basic metals, non-ferrous | +(-) | Increase in production and capacity utilisation. Unchanged employment and new orders received from the export market. Total stock of orders is low and the general outlooks for the forthcoming quarter are expected to be worse. This is supported by expectations of reduced output and weak development in the level of prices in the export market. | |||||||||||||||||||||||||||||||||||||
| Engineering, total | -- | As a whole for these industries there is a decline in production and reduced level of prices both in the home and export market. New orders received have declined, and the index for total stock of orders is at the lowest level since the survey started. Employment has dropped and the capacity utilisation is very low, seen in a historical perspective. General outlooks are considered to be worse. Production and employment are expected to be further reduced in the 3. quarter. | |||||||||||||||||||||||||||||||||||||
| Metal products | -- | Still weak development with reduction in output, capacity utilisation and employment. A great number of leaders report reduction in prices in the home and export market, and lower total stock of orders. Lack of demand limits production. General outlooks for the 3. quarter are considered by many leaders to be worse and there is no sign of recovery in the short term | |||||||||||||||||||||||||||||||||||||
| Machinery and equipment | - | Low level of new orders received and weak development both in the home and export market. Reduced production, capacity utilisation and employment in the 2. quarter. General outlooks are judged to be worse and further reduction in output is expected in the coming quarter. New orders received and prices in the export market are expected to be unchanged in the 3. quarter. | |||||||||||||||||||||||||||||||||||||
| Electrical and optical equipment | -(+) | Weak development in the 2. quarter with reduced production and new orders received. Decline in prices both in the home and export market. General outlooks for the coming quarter are considered to be slightly better, and a moderate increase is expected in production and capacity utilisation. A certain increase in the level of new orders received is expected, while the level of prices is expected to drop further. | |||||||||||||||||||||||||||||||||||||
| Offshore-related activity, transport industry included | - | Reduced production and employment. Capacity utilisation has dropped nearly 14 per cent in one year. Total stock of orders is very low. A great number of leaders report that increased competition in the home and export market is limiting production. The general outlooks are considered to be worse, but this opinion is shared by fewer leaders than in the previous quarter. | |||||||||||||||||||||||||||||||||||||
| In the column for Prospects a total evaluation of the present situation and expected short-term developments is marked with symbols + and -. The following codes and constellations are used: |
++
+ ~ - -- -(+) +/- |
Very good
Good Stable Weak Quite weak Weak, but with certain positive indications A situation where the + and - factors even out. |
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Additional information
The statistics provide current data on the business cycle for manufacturing, mining and quarrying by collecting business leaders’ assessments of the economic situation and the short term outlook.
Contact
-
Edvard Andreassen
E-mail: edvard.andreassen@ssb.no
tel.: (+47) 40 90 23 32
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Ståle Mæland
E-mail: stale.maeland@ssb.no
tel.: (+47) 95 05 98 88