Business tendency survey for manufacturing, mining and quarrying, Q4 2014

The Business tendency survey for the fourth quarter of 2014 shows a levelling out in total output. Producers within manufacturing of capital goods experienced a clear decline in production. This is explained by a fall in the level of activity within industries such as building of ships, boats and oil platforms and within repair and installation of machinery. Within intermediate goods, there were no major changes in the total production. However, some industries such as wood and wood products, basic metals and basic chemicals faced an increase in production, while paper and paper products showed a downward trend. Manufacturers of consumer goods reported an increase in the production volume. It is particularly the food industry that contributes to this increase. Altogether, the changes within the various industries resulted in an almost unchanged output in manufacturing from the third to the fourth quarter of 2014.

Total employment was slightly down from the previous quarter. Fewer employees within manufacturing of consumer goods pulled down the total employment, but an increase in employees among manufacturers of intermediate goods curbed this downturn.

Lower level of new orders, but increased export prices

There was an overall decline in new orders in both the domestic and export market in the fourth quarter of 2014. However, there was a considerable variation between the different industries. For producers of capital goods, market conditions worsened in this quarter and led to the decline in total stock of orders in manufacturing. Within intermediate goods there was an increase in new orders from the export market and higher export prices. Producers of traditional export goods - basic chemicals and non-ferrous metals - enjoyed this increase particularly due to the currency effects resulting from a weak Norwegian krone. Manufacturers of consumer goods reported an increase in both new orders and in prices, and the food industry in particular contributed to the increase.

Pending decline in the first quarter of 2015

The general outlook for the first quarter of 2015 is considered to be neutral, and investment plans are adjusted downwards. Fewer business leaders are positive about the general outlook compared to the results from the previous quarter, and are expecting a fall in employment and stock of orders. It is particularly manufacturers of capital goods that are negative with respect to the first quarter, which is linked to lower investments in oil and gas activities that are reducing the activity in these industries. However, there was still general optimism among producers of intermediate goods and consumer goods, but with some negative expectations of employment. A weak Norwegian krone improves the competitiveness of many of these manufacturers, which is reflected in the expected growth in new orders from the export market.

The industrial confidence indicator fell from 1 to -2 (seasonally-adjusted net figures) in the fourth quarter of 2014 and was below the historical average. The decline was particularly strong within producers of capital goods. A lower level of stock of orders and an expected reduction in output for these producers are the main causes for the fall in manufacturing as a whole. Values above zero indicate that total output will grow, while values below zero indicate that total output will fall. International comparisons of the industrial confidence indicator are available from Eurostat (EU), The Swedish National Institute of Economic Research and Statistics Denmark.

Declining capacity utilisation in manufacturing

Average capacity utilisation for the Norwegian manufacturing industry is somewhat reduced since the third quarter and is estimated at 79.7 per cent at the end of the fourth quarter of 2014. The result is below the historical average. The decline in capacity utilisation was strongest among manufacturers of capital goods. International comparisons of average capacity utilisation are available from Eurostat (EU).

The average number of working months covered by the current stock of orders in the fourth quarter of 2014 was about the same level as the previous quarter, and is above the historical average. However, a decline in new orders within manufacturing of ships and oil platforms and machinery and equipment contributed to a decline in this indicator for capital goods. The indicator on resource shortage is almost at the same level as in the third quarter, somewhat down from the first half of 2014. A reduced shortage in the labour supply and fewer manufacturers with full capacity utilisation explain this.

Timeliness

The survey data was collected in the period from 10 December 2014 to 25 January 2014.

Assessment of industries in Q4 2014 and the short-term outlook ¹