Business tendency survey for manufacturing, mining and quarrying, Q3 2003

According to the Business Tendency Survey a significant drop in Norwegian interest rates has had little effect throughout the third quarter. The manufacturing industry experienced a decline in output, capacity utilisation and the rate of employment. Total demand was weak, but export prices seem to have stabilised on the current level. Average capacity utilisation was about 78 per cent. A growing number of industrial managers expect a rise in output and total demand in the short run. General outlooks are considered to be better. The industrial confidence indicator (see below) is positive for the first time since the second quarter of 2002.

Intermediate goods: A weak quarter for producers of non-ferrous metals

Sectors producing intermediate goods (pulp, paper and paper products, chemical industry, basic metals and others) report of a drop in output and capacity utilisation throughout the third quarter. The main reason for this was lower activity in production of non-ferrous metals. Export prices continued to grow mostly due to a weakening of the Norwegian currency. Home market prices show no sign of recovery, but fewer leaders point at a weak demand in the domestic market as a factor that limits production.

General outlooks are slightly positive. The confidence indicator for intermediate goods confirms this view.

Capital goods: Yet another difficult quarter

Sectors producing capital goods (metal products, machinery and equipment, offshore-related activity and others) experienced yet another difficult quarter. Output and capacity utilisation continued to fall, and there was no sign of recovery in total demand. An increase in the number of respondents that report of lack of qualified labour as a factor that limits production and more units having full capacity, might be a signal of growing activity within certain sectors.

General outlooks are still considered to be poor, but a growing number of respondents are of the opposite opinion. Total stocks of orders are expected to grow throughout the fourth quarter.

Consumer goods: Negative development throughout the third quarter

Sectors producing consumer goods (food industry, publishing, pharmaceutical industry and others) report of a reduction in output and capacity utilisation throughout the third quarter. These figures are in sharp contrast to the positive results recorded in the previous survey. Fewer managers point at demand from export markets as a factor that limits production.

General outlooks are still considered as positive. A likely explanation for this is that lower Norwegian interest rates are expected to result in higher demand and improved prices for this kind of products.

New indicator published in the Business Tendency Survey

The Business Tendency Survey will include a new indicator from the 3. quarter 2003; "The Industrial Confidence Indicator". This indicator is the arithmetic average of the answers (balances) to the questions on production expectations, total stock of orders and inventories of own products (the latter with inverted sign). The indicator is meant to be leading for the level of industrial production:

• Expected rise in the level of output gives signals of increased production in the forthcoming quarter.
• Increase in the total stock of orders indicates higher level of production due to the coming fulfillment of these orders.
• Increase in the inventories of own products indicates slow sales and reduced activity

This indicator is harmonized with "The Industrial Confidence Indicator" put together by EUROSTAT. It will be published in table 17 and the StatBank. In addition to this, results will be presented on a regular basis as a chart in the quarterly press release. For international comparisons of results for this indicator we refer to EUROSTAT (EU) and The Swedish National Institute of Economic Research (Sweden) on the Internet.