Business tendency survey for manufacturing, mining and quarrying, Q1 2006

According to the Business Tendency Survey, the Norwegian manufacturing industry is experiencing a positive development. A rise in new orders from the domestic and export markets has led to an increasing growth rate for the production output and a higher capacity utilisation. Coupled with this, an improvement in the market prices has been registered. A high level of activity in the offshore-related industries and their subcontractors is the main driving force behind this development, however most of the industries covered by the survey have shown a positive development. Employment in the manufacturing industry increased in the first quarter.

The number of managers citing fierce competition and lack of demand as limiting factors for production is significantly lower than for the same quarter last year. On the other hand, there is an increase in the number of managers who report that lack of capacity and qualified labour limit production. Consequently, the indicator of resource shortage( 1 ) rose sharply in the first quarter (see table 16 ). The average number of working months covered by the current stock of orders is significantly higher than the corresponding figures for 2005. Average capacity utilisation is estimated to be about 83 per cent - the highest level since the record year 1997.

A clear majority of the managers judge the general outlook in the short term (Q2 2006) as better. The positive development of more new orders and improved market prices is expected to continue. The industrial confidence indicator( 2 ) is estimated to be 11 (net figure seasonally adjusted). This is somewhat lower than the results for the fourth quarter of 2005, but still a strong indication of sustained growth in output in the forthcoming quarter. International comparisons are available from EUROSTAT (EU) and The Swedish National Institute of Economic Research (Sweden).

Intermediate goods: Improved conditions in export markets

Sectors producing intermediate goods (pulp, paper and paper products, chemical industry, basic metals etc.) report increases in output, capacity utilisation and the stock of orders. The total rate of employment seems to be somewhat higher than in the fourth quarter. A rise in new orders from the export market and improved export prices contribute to the positive development for these industries. The number of respondents that cite lack of capacity and/or shortage of resources as factors that limit production is somewhat higher than the corresponding figure for 2005. This result is supported by a rise in the number of respondents that report full capacity utilisation. The average capacity utilisation is estimated to be about 85 per cent.

The general outlook in the short term is considered to be better. Expectations of a rise in output, new orders and market prices support this result.

Capital goods: High level of activity in offshore-related industries

Producers of capital goods (metal products, machinery and equipment, offshore-related activity etc.) report considerable growth in the levels of production, capacity utilisation and employment. The total stock of orders has increased as a consequence of a rise in new orders received, both from the domestic and export markets, and for the first time in several years export prices show signs of improvement. A possible explanation for this may be the lack of capacity in the offshore-related industries worldwide. A decreasing number of managers cite fierce competition and lack of demand as limiting factors for production. On the other hand, the lack of qualified labour is reported to be a significant problem. The average number of working months covered by the current stock of orders is estimated at 8.1 for these industries as a whole, and 45 per cent report full capacity utilisation. Average capacity utilisation is estimated to be about 88 per cent. This is the highest level measured since the record year 1997. When comparing results for the average capacity utilisation over time, it is important to take into account that a considerable number of less competitive businesses have shut down since 1997.

The general outlook in the short term is considered better, but in spite of the favourable prospects related to new orders received and the development in prices, a noticeable reduction in the number of managers sharing this opinion has been recorded. One possible explanation for this may be that these industries are approaching full capacity utilisation. If this is the case, there is not much room for further improvement in the short term.

Consumer goods: Indications of a rise in employment

Sectors producing consumer goods (food industry, publishing, pharmaceutical industry etc.) report rising output and capacity utilisation. An increase in the demand in the domestic market is the main driving force behind this development. There are indications of a rise in market prices. The total level of employment seems to be rising for the first time since 1997. The increase in the number of respondents that cite lack of qualified labour as a factor that limits production supports this result. Average capacity utilisation is estimated to be about 78 per cent.

The general outlook in the short term is considered to be positive. Expectations of further growth in output, prices and demand support this result.

(1) This indicator sums up response alternatives from the question related to factors limiting production in the current quarter and which relate to access to resources, together with the response distribution of full capacity utilisation.

(2) The industrial confidence indicator and links to international comparisons are described in the press release Q3 2003 (see Previous articles )