Business tendency survey for manufacturing, mining and quarrying, Q4 2007

According to the business tendency survey, the Norwegian manufacturing industry experienced a further increase in output and employment in the fourth quarter, but the growth rate was somewhat weaker than earlier in 2007. Lower increase in demand from export markets, partly due to a stronger Norwegian currency, contributed to this result. The strengthening of the Norwegian currency also contributed to a more moderate growth in export prices. The number of working months covered by the current stock of orders is somewhat higher than the corresponding figure for 2006, while the indicator for bottlenecks in the production¹(see table 16 ) is more or less unchanged from the previous survey due to a major shortage of qualified labour. The average capacity utilisation in the Norwegian manufacturing industry is estimated to about 85 per cent. International comparisons of average capacity utilisation are available from EUROSTAT .

The general short-term outlook (Q1 2008) is considered to be positive. The industrial confidence indicator² is estimated to 6 (seasonally adjusted net figure). This is the lowest result since 2003, but still above the historical average. International comparisons of the industrial confidence indicator are available from EUROSTAT (EU) and the Swedish National Institute of Economic Research (Sweden).

Negative development in export markets

Sectors producing intermediate goods (pulp, paper and paper products, chemical industry, basic metals, etc) report that the increase in total output shows signs of levelling out. A combination of no growth in new orders from the home market and a fall in new orders from the export market explain this development. An increase in the number of managers who point at weak demand and fierce competition as factors that limit production confirms these results. Domestic prices continue to grow, while export prices are going down partly due to a strengthening of the Norwegian currency. The average capacity utilisation is estimated to about 85 per cent in the fourth quarter, which is somewhat lower than at the beginning of the year.

The general short-term outlook is considered to be positive, but fewer share this opinion. Weaker development in export markets is a likely cause for this result. Prospects of reduced profitability may be the reason why fewer managers are considering an increase in gross capital investments.

Strong growth in new orders

Sectors producing capital goods (metal products, machinery and equipment, offshore-related activity, etc) were able to increase output and employment in yet another quarter, but it is still not sufficient to keep up with the growth in total stocks of orders (see also quarterly statistics on new orders ). A strong development in home market prices must partly be seen as a consequence of this. The number of managers who point at lack of capacity and shortage of qualified labour as factors that limit production is higher than in the corresponding period of 2006, and the number of working months covered by the current stock of orders is more or less the same as one year ago. Average capacity utilisation is estimated to about 90 per cent in the fourth quarter.

The number of managers who considers the general short-term outlook to be better is more or less the same as in the third quarter. Major bottlenecks in production reduce profitability and create a need for an increase in gross capital investments (see also quarterly investments statistics ).

The supply of qualified labour limits production

Sectors producing consumer goods (food industry, publishing, pharmaceutical industry, etc) experienced a further rise in total output, but the growth rate was somewhat weaker than recorded in the previous quarters. Shortage of qualified labour seems to be the main reason for this. The fact that the growth in employment shows signs of levelling out at the same time as a rising number of managers point at supply of qualified labour as a factor that limits production supports this assumption. Market prices continue to grow in domestic and export markets. Average capacity utilisation is estimated to about 80 per cent in the fourth quarter.

A majority of the respondents consider the general short-term outlook to be better, but somewhat fewer share this opinion. There are expectations of high demand and rising prices in domestic markets.