Business tendency survey for manufacturing, mining and quarrying, Q2 2015

The business tendency survey for the second quarter of 2015 shows a downturn in total production. For manufacturers of capital goods the decline is clear, and contributes to the downfall in the total production volume within manufacturing. This is explained in particular by a fall in the activity level among suppliers to the oil and gas sector. Industries like machinery and equipment, building of ships, boats and oil platforms, and repair and installation of machinery all faced a decline in production.

Intermediate goods had an almost flat production, while consumer goods showed an increase in production in the second quarter. For manufacturers of intermediate goods there was increased production in industries such as wood and wood products and basic chemicals. In consumer goods it is particularly the food industry that contributed to a production increase.

The overall employment declined in the second quarter of 2015. The decrease comes from producers in all three main industrial groupings: intermediate goods, capital goods and consumer goods. Within capital goods, very few industry leaders saw the shortage of skilled labour as a limiting production factor, while the proportion that reported demand and competition to be limiting factors saw a significant increase.

Lower demand for manufactured products

There was a downturn in new orders from both the domestic and the export market, as well as a significant decline in the total stock of orders in the second quarter. The decline comes from producers of both intermediate and capital goods. In particular, the market condition is bad for manufacturers of capital goods with a clear drop in new orders from both the domestic and export market. The decline was evident in industries that include suppliers to the oil and gas industry such as building of ships, boats and oil platforms as well as machinery and equipment.

For manufacturers of intermediate goods, the drop in new orders is greatest in the domestic market but also the export market showed a decline. Industries such as basic chemicals and basic metals showed growth in export orders in the second quarter, while export prices edged down for both industries. Manufacturers of consumer goods had an increase in both new orders and prices, where the food and food product industry contributed to the growth.

Pending decline in third quarter of 2015

The general outlook for the third quarter of 2015 is negative, and at its lowest level since the first quarter of 2009. Investment plans are adjusted downward, and employment, stock of orders and prices are expected to fall. This trend is especially influenced by the estimation by producers of investment goods, which is negative with respect to the third quarter. It is expected that market demand will decrease and that there will be a drop in investments in oil and gas in 2015. Producers of intermediate goods are also pessimistic in their overall assessment of the third quarter, while manufacturers of consumer goods are more optimistic.

The industrial confidence indicator fell from - 4 to -8 (seasonally-adjusted net figures) in the second quarter of 2015 and was below the historical average. This is the lowest level since the second quarter of 2009. The decline was particularly strong for producers of capital goods, where lower stock of orders and the expected decline in production are the main reasons for the overall fall. 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 Norwegian manufacturing was calculated to 77.8 per cent at the end of the second quarter of 2015. This is the lowest level recorded since the second quarter of 2010, and the result is below the historical average. International comparisons of average capacity utilisation are available from Eurostat (EU).

The average number of working months covered by the current stock of orders was down in the second quarter from the previous quarter, but is still above the historical average. The indicator on resource shortage is down in the second quarter of 2015. An improvement in the shortage of labour supply and fewer with full capacity utilisation explain this.

Timeliness

The survey data was collected in the period from 10 June 2015 to 27 July 2015.

Assessment of industries in Q2 2015 and the short-term outlook¹: