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This is an archived release.
High capacity utilisation in manufacturing
Norwegian industrial managers report a high level of activity in the second quarter. Lack of capacity and shortage of qualified labour pose an ever-greater challenge for many industries.
According to the Business Tendency Survey, the Norwegian manufacturing industry is experiencing a high level of activity. The level of production and the capacity utilisation continue to rise, and there are clear indications of increased employment in the manufacturing industries. The total stock of orders is higher due to a rise in new orders received from the domestic and export markets. Market prices seem to be improving. The number of managers citing fierce competition and lack of demand as limiting factors for production is significantly lower than for the first quarter. On the other hand, lack of qualified labour and full capacity utilisation are limiting factors to an ever-increasing extent. Consequently, the indicator of resource shortage1 rose further in the second 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 - a high level seen in a historical perspective. However, 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 in the last few years.
A clear majority of the managers judge the general outlook in the short term (Q3 2006) as better. Expectations of positive development in new orders together with improved market prices support this view. The industrial confidence indicator2 is estimated to be 15 (seasonally adjusted net figure). This is 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 of positive development in output and capacity utilisation. An increase in new orders from export markets causes total stock of orders to rise, and market prices seem to improve. The number of managers that cite fierce competition and lack of demand in export markets as limiting factors for production is somewhat lower than the corresponding figure for 2005. This result is supported by an increase in the total stock of export orders. 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 new orders and market prices support this result.
Capital goods: High level of capacity utilisation
Producers of capital goods (metal products, machinery and equipment, offshore-related activity etc.) experience considerable growth in output, capacity utilisation and the level of employment. An increase in new orders from domestic and export markets causes total stock of orders to rise, and market prices seem to improve. Only a small number of managers cite fierce competition and lack of demand as limiting factors for production. However, shortage of qualified labour an full capacity utilisation constitutes a major bottleneck. 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 49 per cent report full capacity utilisation. Average capacity utilisation is estimated to be about 88 per cent.
The general outlook in the short term is considered to be positive, but the high level of capacity utilisation does not leave much room for further improvement in output.
Consumer goods: Moderate rise in employment
The results from sectors producing consumer goods (food industry, publishing, pharmaceutical industry and others) indicate that total output is higher than in the first quarter. Positive development in domestic market demand is the main driving force behind this development. Market prices also seem to improve in the second quarter. The total level of employment is growing for the first time since 1997. An increase in the number of respondents that cite lack of qualified labour as a factor that limits production confirms 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 and demand, together with further improvement in domestic market prices, support this view.
| Assessment of industries in Q2 and the short-term outlook |
| Industry | Prospects | Background | |||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Food products, beverages and tobacco | + | Higher levels of capacity utilisation and production in Q2. More or less unchanged level of employment. Demand from the domestic market has increased together with the prices. Demand from the export market is reduced. General outlook for Q3 is positive, and further increases in output and demand from the domestic market are expected. | |||||||||||||||||||||||||||||||||||||
| Wood and products of wood | ++ | Higher levels of production and employment. Increase in new orders from the domestic market, while the level of new orders from the export market is more or less unchanged. Increases in domestic and export prices. Many managers still judge the general outlook as better, and further increases in output, employment and prices are expected. | |||||||||||||||||||||||||||||||||||||
| Pulp, paper and paper products | + | Growth in output and capacity utilisation. Reduced level of employment. Increase in new orders from the export market, while export prices have declined. General outlooks is judged as better by many managers, and an improvement in export prises is expected together with increases in the level of production and new orders. | |||||||||||||||||||||||||||||||||||||
| Basic chemicals | + | High level of capacity utilisation and increased output. Reduced level of employment. Improved domestic and export market prices. Increase in new orders. General outlook for Q3 is better. Further increases in output, capacity utilisation, new orders and prices are expected in the forthcoming quarter. | |||||||||||||||||||||||||||||||||||||
| Basic metals, non-ferrous | ++ | Many managers report an increase in output, capacity utilisation and employment. Growth in new orders and market prices have improved. Lack of raw materials and/or electric power and full capacity utilisation limits production. The general outlook for Q3 is positive. This view is supported by expectations of growth in output, new orders and capacity utilisation. | |||||||||||||||||||||||||||||||||||||
| Engineering, total | ++ | On the whole, the engineering industries have experienced growth in output, employment, capacity utilisation and new orders. Prices have risen, both in domestic and export markets. Many managers cite shortage of qualified labour and lack of capacity as limiting factors for production. Many managers consider the general outlook as better, and further growth in output, employment, stocks of orders and market prices are expected in Q3. | |||||||||||||||||||||||||||||||||||||
| Metal products | ++ | High level of activity and further growth in capacity utilisation and employment. Improved market prices and an increase in new orders from domestic and export markets. Lack of qualified labour limits production. Many managers judge the general outlook for Q3 as positive. Further growth in the levels of production, employment, new orders and prices are expected. | |||||||||||||||||||||||||||||||||||||
| Machinery and equipment | ++ | Many managers report higher levels of production, employment and new orders in Q2. The average number of working months covered by the current stock of orders has risen, and many managers cite lack of qualified labour as a limiting factor for production. Many managers judge the general outlook as better and a rise in output, capacity utilisation, employment, new orders and market prices are expected in the forthcoming quarter. | |||||||||||||||||||||||||||||||||||||
| Electrical and optical equipment | ++ | Growth in output, capacity utilisation and employment. Higher level of new orders in domestic and export markets. Domestic market prises have risen, while export prices have declined. General outlook for Q3 is positive and further increases in output, capacity utilisation and employment are expected. Total stock of orders is also expected to rise. | |||||||||||||||||||||||||||||||||||||
| Offshore-related activity incl. transport industry included | ++ | Huge orders received in the previous quarters have contributed to a high level of activity and further growth in the total stock of orders is reported in Q2. Output has risen together with capacity utilisation, employment and prices. Shortage of qualified labour and lack of capacity utilisation limits production. The general outlook for Q3 is judged as better and further increases in production, employment, new orders and prices are expected. | |||||||||||||||||||||||||||||||||||||
| In the column for Prospects a total evaluation of the present situation and expected short-term developments is marked with the 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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1This 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.
2The industrial confidence indicator and links to international comparisons are described in the press release Q3 2003 (see Previous articles )
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