Business tendency survey for manufacturing, mining and quarrying, Q1 2009

According to the business tendency survey, conditions for the manufacturing industry worsened in the first quarter of 2009. There are clear indications of a further decline in output and employment, while total stock of orders fell due to poor demand in domestic and export markets. The negative course of events is mirrored by a weakening in market prices. Lack of demand is a major concern among Norwegian industrial managers. Signs of further growth in stocks of finished goods support this view. However, lack of capacity and shortage of qualified labour no longer seem to be a problem. The number of working months covered by the current stock of orders is much lower than the corresponding figure for 2008, while average capacity utilisation is estimated to have fallen to 77.2 per cent. This is about the same level as recorded in the poor year of 2003. However, the total production capacity in the manufacturing industry has grown in the past few years and total output is therefore substantially higher than six years ago (see Index of production ). International comparisons of average capacity utilisation are available from EUROSTAT .

A rising number among the industrial managers consider the general short-term outlook (Q2 2009) to be negative. Expectations of a further decline in production, new orders and market prices support this result. The same development is recorded for the number of managers who claim they are considering a reduction in planned gross capital investments. The industrial confidence indicator is estimated at -21 (seasonally-adjusted net figure) in the first quarter and is somewhat higher than recorded in the previous survey. This result is still way below the historic average and indicates a further weakening of the business cycle. International comparisons of the industrial confidence indicator are available from EUROSTAT (EU) and the Swedish National Institute of Economic Research (Sweden).

Poor results for sectors producing intermediate goods

Sectors producing intermediate goods (wood and wood products, paper and paper products, non-metallic mineral products, basic metals etc.) experienced a further decline in output and employment. Poor demand from domestic and export markets explain these results, and the development is mirrored by a fall in market prices. Lack of demand is a major concern among the industrial managers. Average capacity utilisation is estimated to be as low as 73.8 per cent, and the number of working months covered by the current stock of orders lies well below the historic average. The general short-term outlook is considered to be negative. Expectations of a further decline in output, new orders and market prices support this result. A growing number among the respondents claim they are considering a reduction in planned gross capital investments.

Decline in total stocks of orders

Sectors producing capital goods (machinery and equipment, ships, boats and oil platforms etc.) report a negative development in output and employment. Poor demand is causing total stocks of orders to fall, and market prices also seem to be going down. Lack of demand is a major concern among the respondents in question. However, lack of capacity and shortage of qualified labour no longer seem to be a problem. Average capacity utilisation is estimated to be 82.8 per cent. The number of working months covered by the current stock of orders is somewhat lower than recorded one year ago, but remains at a high level. A rising number among the industrial managers consider the general short-term outlook to be negative, and many of them are considering a reduction in planned gross capital investments.

Further increase in prices of consumer goods

Sectors producing consumer goods (food products, printing and reproduction, basic pharmaceuticals, furniture etc.) experienced a decline in output and employment. Poorer demand from domestic markets and export markets explains these results. Market prices, however, continued to rise.

Average capacity utilisation is estimated to be 74.7 per cent in the fourth quarter. This is somewhat below the historic average. The indicator covering the general short-term outlook is changing from neutral to negative. Expectations of a further decline in demand support this result.