Business tendency survey for manufacturing, mining and quarrying, Q1 2010

According to the business tendency survey, the Norwegian manufacturing industry experienced a stabilisation in output after six quarters of decline. Total employment continued to fall, but the downward trend shows signs of levelling out. A lack of new orders for capital goods caused total stocks to decline and had a negative effect on market prices. Poor demand and fierce competition continued to play a major role in restricting production.

The number of working months covered by the current stock of orders was close to the historic average for the manufacturing industry. This is significantly less than the corresponding figure for 2009. Poor demand for ships, boats and oil platforms partly explains this development. Average capacity utilisation is estimated at 76.9 per cent. International comparisons of average capacity utilisation are available from EUROSTAT .

The indicator covering the general short-term outlook (Q2 2010) is changing from neutral to positive. Prospects of improved conditions for producers of intermediate goods and consumer goods explain this development. The industrial confidence indicator is estimated at 3 (seasonally-adjusted net figure) in the first quarter. The result indicates a modest improvement in the business cycle. International comparisons of the industrial confidence indicator are available from EUROSTAT (EU), the Swedish National Institute of Economic Research (Sweden) and Statistics Denmark .

Improved conditions for producers of intermediate goods

Sectors producing intermediate goods (wood and wood products, paper and paper products, non-metallic mineral products, basic metals etc.) experienced modest growth in output. Meanwhile, employment continued to fall. An increase in new orders from home and export markets caused total stocks of orders to rise. Market prices, however, continued to fall. The number of working months covered by the current stock of orders lies close to the historic average for the industries in question. Average capacity utilisation is estimated at 77.2 per cent.

The general short-term outlook is considered to be positive. A decline in stocks of finished goods and prospects of a rise in new orders explains this result.

Low capacity utilisation among producers of capital goods

Sectors producing capital goods (machinery and equipment, ships, boats and oil platforms etc.) experienced a further reduction in output and employment. A lack of new orders caused total stocks to fall, and the poor demand was reflected by a decline in market prices. The number of working months covered by the current stock of orders lies close to the historic average. However, average capacity utilisation is estimated to be as low as 78.1 per cent. Investments in excess capacity in the years prior to the international financial crisis partly explain this result.

The general short-term outlook is still considered to be poor, but somewhat fewer share this view. The decline in new orders from domestic markets is expected to come to a halt in the second quarter.

Improved demand for consumer goods

Sectors producing consumer goods (food products, printing and reproduction, basic pharmaceuticals, furniture etc.) experienced growth in output and employment. Improved demand from domestic markets was the main reason for this development. Home market prices were more or less unchanged in the first quarter, while export prices continued to fall. Average capacity utilisation is estimated at 75.3 per cent. This is well below the historic average for the industries in question.

The general short-term outlook is considered to be positive. Expectations of a further growth in output and demand explain this result.